65438+On February 7th, the Federal Reserve announced that it would raise the federal funds rate by 25bp, officially entering the interest rate hike cycle. We believe that the current US and global economies are still in the process of slow recovery, and we do not support the Fed's sustained and rapid rate hike. However, it should be noted that the expected future policy interest rate path of the current market is quite different from that of the Federal Reserve, and it is necessary to guard against the risk that the Fed will raise interest rates faster than expected. The impact of the US dollar interest rate hike on China's capital market is mainly reflected in the exchange rate of RMB against the US dollar. In the short term, the US dollar interest rate hike will increase the downward pressure on the RMB exchange rate; In the medium and long term, the exchange rate of RMB against the US dollar will depend on the effectiveness of China's reform. Only by firmly pushing forward the supply-side reform, further improving labor productivity and improving the quality and efficiency of economic growth can China's economy calmly cope with the uncertainty caused by the Fed's interest rate hike.

First of all, the slow economic recovery in the United States and the world does not support the Fed to raise interest rates quickly. At present, the performance of American economic recovery is mainly employment-driven consumption recovery, and investment demand is still weak. Measured by GDP growth rate, the actual consumption expenditure of American residents increased by 3. 15% in the third quarter, and the growth rate in the last four quarters was the highest since 20 10. In the third quarter, US private sector investment actually increased by only 3.78% year-on-year, the fifth lowest growth rate since 20 10. The driving force of American economic recovery is shifting from investment to consumption, which means that the financing demand corresponding to the same economic growth rate is reduced, which will restrict the rising space of interest rates. In fact, due to China's economic transformation, the aging population in the euro zone and Japan, the global investment demand is generally depressed, the economic recovery may not bring about the recovery of financing demand, and interest rates are generally in a downward cycle, which will also restrict the Fed's interest rate hike space.

Secondly, the market's assessment of the US economy is similar to that of the Federal Reserve, and the difference in policy interest rate expectation stems from the difference in thinking mode, so it is necessary to guard against the risk of policy black swan. According to the forecast of the Federal Reserve, at the end of 20 16, the GDP of the United States increased by 2.4% year-on-year, the unemployment rate was 4.7%, and the core PCE inflation was 1.6%, which was basically consistent with the current mainstream market expectations. However, Fed officials predict that the federal funds rate will rise to 65,438+0.375% by the end of 2065,438+06, while the federal funds rate futures predict that the federal funds rate will only be 0.83% by the end of 2065,438+06. We believe that different judgments on future policy interest rates are likely to stem from different ways of thinking between the market and Fed officials. At present, the mainstream logic of the market is to deduce the result from the process. According to the reasons we mentioned earlier, neither the United States nor the global economy supports the Fed to raise interest rates quickly. The Fed's logic is to infer the process from the results. Assuming that the desirable unemployment rate of the US economy is 4.5-5.0% and the core PCE inflation is around 2.0%, even if the actual policy interest rate is zero, the nominal federal funds rate will reach 2.0% (in fact, the medium-term federal funds rate expected by Fed officials is as high as 3.5%). With this as the goal, if the unemployment rate and core inflation reach 4.7% and 1.6% respectively, it is reasonable to raise the federal funds rate to 1.375%. Of course, historically, the optimism of Fed officials about the economy and interest rates has a low probability of being realized. However, when the market and the Fed's economic expectations are basically the same, it is necessary to guard against the black swan risk of the Fed's policy caused by different ways of thinking.

Third, the core of China's response to the Fed's interest rate hike is to improve labor productivity. In the short term, the short-term and long-term spreads between China and the United States are narrowing in the context of the Fed's interest rate hike. Domestic enterprises and residents still have strong motivation to repay foreign currency debts and allocate foreign currency assets, and the pressure of capital outflow is greater. We have noticed that the central bank has recently expanded the fluctuation range of the RMB exchange rate against the US dollar and actively released the depreciation pressure. This will not only help ease the domestic deflationary pressure, but also open up space for the relaxation of domestic monetary policy and create neutral and moderate monetary conditions for economic transformation. Considering that the US economy is recovering moderately, and China has become the second largest economy in the world and the most important engine of global economic growth, cross-border capital flows and exchange rate changes depend more on China's own economic situation. Only through the supply-side reform and the adjustment of exchange rate and interest rate policies can labor productivity be further improved and the Fed's interest rate hike be calmly dealt with.