On the 26th local time, the Federal Reserve ended its two-day monetary policy meeting and announced a 25 basis point interest rate hike. This is after the interest rate hike was suspended once in June. The following small series brings the Fed to raise interest rates by 25 basis points or cut interest rates next year. Let's take a look at it together, hoping to bring some reference.

The Federal Reserve announced a 25 basis point rate hike.

The Federal Reserve restarted raising interest rates again, raising the target range of the federal funds rate to 5.25% to 5.50%, reaching the highest level in 22 years, in line with market expectations. Since the beginning of the interest rate hike cycle last year, the Federal Reserve has raised interest rates by 1 1 time, with a cumulative interest rate increase of 525 basis points, and the federal funds rate has also been raised from 0%-0.25% to 5.25%.

Analysts pointed out that the Fed may end the current interest rate hike cycle due to the obvious signs of slowing inflation and employment growth in the United States recently. However, the inflation target of 2% has not been reached. The hawkish policy tendency of the Fed may still exist in the future, and the Fed may not cut interest rates until at least the first half of next year.

What does the Fed mean by raising interest rates by 25 basis points?

In order to achieve the goal, FOMC decided to raise the benchmark interest rate to the range of 0.25%-0.5%. "It is expected that the continuous increase of the target range will be appropriate". In addition, regarding the issue of "shrinking the table" closely watched by the outside world, the statement said that the Committee is expected to start reducing its holdings of US Treasury bonds, institutional debt and institutional mortgage-backed securities at the upcoming meeting.

What is the impact of the Fed's interest rate hike of 25 basis points on China?

1, the Fed's interest rate hike of 25 basis points will increase the borrowing cost of commercial banks from the central bank. The pressure of RMB depreciation has increased, and the bull market in the bond market is unsustainable.

2. The Federal Reserve raised interest rates, and the depreciation of the RMB led to an increase in the repayment pressure of US dollar bonds, and the risk of default of urban investment bonds increased, which also adversely affected the credit bond market.

3. To some extent, it will alleviate the imported inflationary pressure in China. If the Fed raises interest rates and inflation goes down, the continuous imported impact on China will also be alleviated.

4. Accelerating the tightening of the Federal Reserve's monetary policy will shorten the time window for China's monetary policy relaxation, and increase the difficulty of balanced and steady growth and risk prevention of monetary policy.

5. It will have a great impact on the capital market, or it will lead to capital outflow. To put it simply, the tightening of the Fed's policies will lead to an increase in interest rates of various maturities, and a large amount of foreign capital will inevitably flow out.

Is it bad or good for the Fed to raise interest rates by 25 basis points?

Not good. According to relevant public information, on February 1 day local time, the Federal Reserve announced that it would raise the target range of the federal funds rate by 25 basis points to between 4.5% and 4.75%. Since entering the current interest rate hike cycle in March 2022, the Federal Reserve has raised interest rates by 450 basis points. The rate hike is the smallest since March 2022. Some market analysts believe that the current Fed rate hike cycle may be coming to an end, and the slowdown of the Fed rate hike will drive the revaluation and appreciation of the core assets of RMB assets.

The impact of the Federal Reserve's interest rate hike of 25 basis points in March on gold

The Fed's interest rate hike of 25 basis points in March will lower the price of gold. The Fed's interest rate hike of 25 basis points in March usually has a certain negative impact on the price of gold, because the interest rate hike will strengthen the dollar, and gold is usually negatively correlated with the dollar, that is, when the dollar strengthens, the price of gold tends to fall. Therefore, the Fed's interest rate hike is usually regarded as one of the important factors for the decline of gold prices.