The Federal Reserve's interest rate cut decision extends far beyond the borders of the United States; it will act like pressing the reset button on global financial markets, triggering a series of chain reactions.

If Chairman Powell ultimately chooses to cut interest rates, we may witness the following five global impacts:

First, global asset prices may usher in a wave of euphoria, but this is accompanied by an increased risk of bubbles. The U.S. stock market, especially the tech sector, is expected to reach new highs. At the same time, digital currencies like Bitcoin and traditional safe-haven assets like gold may be in high demand, with Bitcoin possibly challenging the $100,000 high. However, in 2024, U.S. stock valuations are already at historical highs, and interest rate cuts could further inflate the bubble, reminiscent of the scene just before the burst of the internet bubble in 2021.

Secondly, the US dollar may face depreciation pressure, and the global currency war may heat up again. The Renminbi, Euro, and Yen may strengthen in the short term. However, this may force central banks in other countries to follow suit and lower interest rates to avoid excessive appreciation of their currencies impacting exports. The Bank of Japan may face a particularly tricky situation: if it does not lower interest rates, the Yen may appreciate significantly, but the Japanese economy may struggle to withstand this shock. Ultimately, we may see a situation where global currencies are competing to depreciate.

Thirdly, commodity prices may experience a significant increase. Oil prices could return to the high of $100 per barrel, while copper, a key raw material for the new energy industry, may enter a new super cycle. However, this also brings the risk of inflation re-emerging. Considering the deep imprint left by global high inflation in 2022, central banks may need to find a delicate balance between stimulating the economy and controlling inflation.

Overall, the Federal Reserve's decision to cut interest rates will have far-reaching effects globally, impacting asset prices, monetary policy, commodities, and inflation expectations in every sector. Investors and decision-makers need to closely monitor this potential turning point and be prepared for various scenarios that may arise.