Fed's Three Rate Cuts Lead to Decline in USD Deposit Rates

Summary

The Federal Reserve has cut interest rates three times in 2025, leading to a decline in U.S. dollar deposit rates, which are further diluted by the appreciation of the RMB. Most domestic banks’ dollar deposit rates have fallen below 3%, with some banks still offering high-interest products. Industry experts expect further declines in dollar deposit rates, advising investors to be cautious of dual risks from exchange and interest rate fluctuations.TMT Post

Impact Analysis

So the Fed’s three rate cuts this year are a clear pivot towards easing, likely in response to economic uncertainties and employment risks. This has pushed U.S. dollar deposit rates below 3% in many banks, with the RMB’s appreciation further eroding returns. The timing suggests the Fed is prioritizing economic support over inflation control, which could lead to a weaker dollar and increased capital flows into emerging markets. For investors, this means navigating a tricky landscape of low yields and currency volatility. The market might be underestimating the potential for further dollar weakness, especially if other central banks maintain tighter policies. This could be a good time to look at emerging market equities or commodities like gold, which could benefit from a weaker dollar and global liquidity shifts. Watch for any signs of inflation picking up, as that could change the Fed’s stance and impact these dynamics.Sina Finance+ 3