The predicament of the US dollar indicates that the United States is actively relinquishing its position as the global economic leader

At the Federal Reserve's interest rate meeting in September this year, the Fed restarted interest rate cuts, lowering the rate by 25 basis points. In terms of this rate cut alone, it is difficult to directly conclude that the creditworthiness of the US dollar has weakened. Looking back to March 2022, the Fed embarked on its most aggressive tightening cycle in four decades, but since September last year, it has shifted to interest rate cuts. After three consecutive rate cuts, the Fed suspended action for the first five meetings this year, until it cut interest rates again in September. Powell defined this rate cut as a "risk management-style rate cut" and repeatedly emphasized that if it were not for the impact of Trump's tariff policy, the Fed might have initiated rate cuts earlier. This shows that this rate cut was not entirely due to external pressure.

The Federal Reserve bears a dual mission: price stability and maximizing employment. After the interest rate meeting in July this year, Trump's tariffs have been implemented for half a year. Although inflation has rebounded, the magnitude is limited. Meanwhile, the employment data after July has shown signs of accelerated deterioration, posing greater challenges for the Federal Reserve in achieving its goal of maximizing employment. This is precisely the backdrop for the interest rate cut in September.

The interest rate was cut by 25 basis points this time, despite Trump's repeated public pressure for a larger cut before the meeting. The Federal Reserve resisted the pressure and only made a routine adjustment. It is worth noting that there was only one dissenting vote at this meeting, and the governor who voted against the rate cut in July this time switched to support it. The newly appointed governor, Steven Milan (formerly the chairman of the White House Council of Economic Advisers, with strong political affiliations), cast a dissenting vote, advocating a 50 basis point cut. This voting result reflects that the Fed maintains a high degree of unity internally, indicating that this rate cut is more of an implementation along the established policy path, rather than a further loosening of the creditworthiness of the US dollar. After the rate cut, the US dollar index stopped falling and rebounded, rising from below 97 to around 99.