For most countries, cutting central bank interest rate is an easy way to help weaker economy. However, there is a limit, eg from current 2.5%, still could allow further 10 times 0.25% cut for Malaysia.
For US, the Fed just cut interest rate by 0.5% from 1.5-1.75% to 1.25-1.5%, only left 5 times 0.25%, before falling to negative interests rate as in Japan and Europe.
Interest rate cut in bear market or weaker economy (eg Malaysia) is a danger signal. Buy low may get lower for stock market. In general, Malaysia has 2% higher bank interest rate than Singapore. However, the gap now is narrower to only 1% difference. Bank stocks in Malaysia would suffer due to smaller NIM (net interest margin), therefore trend of share price has been bearish.
Interest rate cut in bull market or strong economy (eg US) could help to prolong the 11 years bull run but more suitable for short term traders as US stock market is unstable at high optimism, any black swan (eg Coronavirus, surprises in 2020 US presidential election, China economy slowdown affecting the whole world, etc). If the short term stock market in US is recovered or even achieve another new historical high in near future, both traders and investors may need to seriously plan for exit strategy with trend-following strategies.
Last 2 years of interest rate cut in US is a preventive measure to sustain the bullish economy against any potential market threat. However, the bullets left are limited for the Fed to cut the interest rate further, implying QE (Quantitative Easing) may be the limited few weapons left for future global financial crisis at the expense of inflation with depreciation in currency, etc.
Negative interest rate is not the end of the world (could be a shock) as Europe and Japan have experienced, could become a norm in future. However, central banks of countries would need to print money with QE or leveraging on other stimulus plans during next global financial crisis.
So, holding cash for long term without investment (stock, property, commodity, etc) would lose to inflation with low interest rate for long term in future. Bond also has gloomy future due to sibling low bank interest rate.
There is no free lunch in the world. Market gets the reward (interest rate cut) first, implying future has to pay back in other ways.
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