In this super central bank week, several central banks have announced their latest interest rate hike decisions.

However, many investors might not have anticipated that one country's central bank has announced a substantial interest rate cut, as high as 5,000 basis points, reducing the rate from a previous 200% to 150%.

The Federal Reserve's consecutive interest rate hikes have decreased in magnitude, which has also brought a collective sigh of relief to the global economy, especially for many emerging countries where the pressure is easing.

On the other hand, the US dollar is increasingly trending towards depreciation, with the extent expected to grow larger.

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01, A 14,000 basis point rate cut!

Zimbabwe accumulated a total of 14,000 basis points in interest rate hikes last year, including a one-time increase of 12,000 basis points in the middle of the year, which adjusted the benchmark rate from 80% to 200%.

This country's interest rate hikes and cuts are particularly drastic, and now it has once again reduced the rate from 200% to 150%. Last year's rate hike was the global champion, and this year's rate cut is also temporarily the global champion.

Recently, Zimbabwe's annual inflation rate has reached as high as 230%, but the monthly inflation rate of 1.1% has already shown a significant decline. This seems to indicate that the central bank's substantial interest rate hikes last year have had a good effect.

However, over the years, Zimbabwe has been suffering from the impact of severe inflation, with the currency devaluation rate also reaching the global champion. Before the pandemic, the country's economy was already in recession, and looking back further, after the country implemented reforms at the beginning of the century, it suffered sanctions from Western countries, leading to economic contraction and high inflation.

In recent times, as commodity prices have gradually stabilized, especially as the Federal Reserve's interest rate hike pace has begun to slow down, the pressure on emerging countries like Turkey and Argentina has significantly decreased, and Zimbabwe can finally breathe a sigh of relief.02, Europe Strikes Back in Sync

On the other hand, several developed countries in the West continue to raise interest rates, and there have even been significant increases. This may be a counterattack against the US dollar.

Although the US interest rate hike has been reduced to 25 basis points, the European Central Bank and the UK's rate hikes remain as high as 50 basis points.

The UK's recent inflation seems to be declining, with the CPI at 10.7% in November and dropping to 10.5% in December. However, the Bank of England believes that the job market is also very tight, with wage pressure increasing more than expected, indicating that inflation will continue for a longer period. Therefore, the policy of raising interest rates cannot be relaxed too quickly.

On the other hand, the UK's economic recession may last longer, with GDP expected to show negative growth this year and next year, reaching -0.5% and -0.25% respectively.

At the same time, the European Central Bank also raised interest rates by 50 basis points, and the current interest rate has reached the highest level since 2008. Moreover, the European Central Bank has indicated that there will be another 50 basis point rate hike in March.

Since the Federal Reserve may only raise interest rates by 25 basis points in March, the recent consecutive two rate hikes have reduced the interest rate gap between the euro and the US dollar by at least 50 basis points, which may accelerate the appreciation of the euro against the US dollar.

Inflation in the eurozone has fallen to 8.5%, which is much lower than before, but the European Central Bank believes that this is still far from the 2% target.

03, Devaluation of the US Dollar

Under the joint "counterattack" of various countries, the British pound, euro, and yen have all appreciated against the US dollar, suppressing the trend of the US dollar. From the trend, the downward and devaluing trend of the US dollar has been formed.This is bad news for the United States.

When the US dollar appreciates, many assets priced in dollars have declined, so the funds that flowed into the US last year did not yield high profits, and there is even a possibility of losses.

Now that the US dollar has begun to depreciate, the investment value of US stocks and bonds is very uncertain, and continuing to hold US dollar assets could still result in losses. Therefore, the funds that flowed in last year are expected to flow out this year.

On the other hand, last month, the growth rate of M2 in the United States turned negative for the first time, indicating that the money supply in the United States has experienced negative growth.

The combination of these two factors could lead to a liquidity crunch in the US market.

As the global financial market begins to catch its breath, the United States must pay the price for its past actions.