The US Federal Reserve ended its two-day monetary policy meeting and announced that it would keep the current target range of 5% to 5.25% of the federal funds rate unchanged, in line with market expectations. The following small series took the Fed to stand still and announced the suspension of interest rate hikes. Let's take a look at it together, hoping to bring some reference.

The Fed stood its ground and announced a moratorium on raising interest rates.

This is also the first time that the Fed has pressed the "pause button" since it started the aggressive interest rate hike cycle in March last year. Since the beginning of the interest rate hike cycle last year, the Federal Reserve has continuously raised interest rates by 10 times, with a cumulative increase of 500 basis points, and the federal benchmark interest rate has also been raised from 0%-0.25% to 5%-5.25%.

In May, the US CPI rose by 4% year-on-year, hitting a new low in more than two years.

Analysts pointed out that the high probability of the Fed's suspension of interest rate hikes is that inflation in the United States has obviously cooled down, so it is time to suspend interest rate hikes to measure the lagging impact of this round of interest rate hikes on the US economy, especially the credit crunch in the banking industry. On the day before the Federal Reserve announced its interest rate decision, that is, 13, the US CPI data for May was released, rising by 4% year-on-year, reaching the lowest level in more than two years in March of 202 1. Excluding volatile energy and food, the core CPI rose by 5.3% year-on-year in May, and the growth rate also slowed down.

The market expects that the Fed's interest rate hike cycle has not yet ended and will continue to raise interest rates by 25 basis points.

In view of the fact that the current inflation level in the United States is still higher than the Fed's target of 2%, market participants generally believe that the Fed's interest rate hike cycle has not yet reached the "end point", and for the follow-up policy path, the futures market unanimously believes that the terminal interest rate of this cycle will be 5.25%-5.50%, which means that compared with the current interest rate level, there is still room for raising interest rates by 25 basis points, but the Fed will raise interest rates in July or September. At present, the market is quite divided. In addition, the market also expects the Fed to cut interest rates as soon as the end of this year.

What does it mean for the Fed to stop raising interest rates?

The Fed's failure to raise interest rates means that the stock market will not be affected for the time being, which is good news for the US stock market and even the world stock market. Because the currencies of many countries in the world are related to the currencies of the United States, after the Fed raises interest rates, the prices of many precious metals and commodities calculated in dollars will fall, and the share prices of the distribution enterprises of these commodities will also fall. Therefore, it is good for the stock market that the Fed does not raise interest rates.

Will the Fed stop raising interest rates? What is the impact of China?

1. The impact of the Fed's interest rate hike on China's economy.

The Fed's interest rate hike has become the focus of the global economy, and its impact on China has also attracted much attention. Raising interest rates will lead to an increase in the exchange rate of the US dollar, which will push up the yield of US Treasury bonds, thus increasing the cost of borrowing, thus curbing consumption and corporate investment. This will have an impact on China's trade with the United States. The cost of goods in China will rise and sales will be restrained.

2. The impact of the Fed stopping raising interest rates

The suspension of interest rate hikes by the Federal Reserve will have a positive impact on China's economy. First of all, a lower exchange rate of the US dollar will reduce the cost of China's products, which is beneficial to trade with the United States. In addition, the decline in the yield of US Treasury bonds will reduce borrowing costs, stimulate enterprise investment and consumption, and promote economic growth. In addition, the depreciation of the US dollar will enhance China's competitiveness in the global capital market and attract more foreign investment into the China market.

3. Fine-tuning policies should be strengthened.

China government should strengthen policy fine-tuning, take various measures to deal with the risks brought by interest rate hikes, and reduce the impact of interest rate hikes by lowering interest rates or discount rates. In addition, China should accelerate structural reform, increase medium and long-term investment, improve industrial competitiveness and reduce trade pressure.

We should not rely too much on American market.

In the process of foreign trade, China should avoid over-reliance on the American market, expand other markets and cultivate new trading partners. At the same time, China should step out of the development mode of "low cost, low technology and low added value", develop high added value goods, improve the competitiveness of enterprises and inject new impetus into China's economy.