The impact of the Fed's interest rate hike
1. To some extent, control "hot money" lending that will lead to financial bubbles. If the interest rate stays at the ultra-low level for too long, there will eventually be over-leveraged lending, which will eventually lead to a sharp correction in the market.
2. This will give the Fed enough currency flexibility to cope with different economic situations. During the recession, the Fed has the ability to loosen money to stimulate the economy. In times of inflation, the Fed has the ability to tighten policies to slow inflation.
3. Protect the status of the US dollar as the world's major reserve currency. Most currencies are pegged to the dollar. Raising interest rates in the United States will increase the global demand for American bonds, especially at this stage when bond yields in other countries are falling. Foreign investors must change their currencies into dollars to buy American bonds, and this time the demand for dollars will become stronger.
4. The dollar will rise, while the commodity, precious metals and foreign exchange markets denominated in dollars will fall. For some emerging economies, this may mean capital outflow, which in turn will lead to the downward exchange rate of local currencies, and the currencies of other countries, including RMB, will continue to depreciate. The most direct impact of currency depreciation is the intensification of capital outflow, which has the greatest impact on emerging market countries.
The Federal Reserve System of the United States, referred to as the Federal Reserve, is responsible for performing the duties of the central bank of the United States. The system was established on 19 13 12/23 according to the Federal Reserve Act. The core management body of the Federal Reserve is the Federal Reserve Board of Directors. ?
The Federal Reserve System of the United States consists of the Federal Reserve Board in Washington, D.C. and 65,438+02 regional federal reserve banks in major cities of China. Jerome Powell is currently the CEO of the Federal Reserve (Chairman of the Board of Directors of the Federal Reserve). As the central bank of the United States, the Federal Reserve obtains power from the United States Congress, and exercises duties such as formulating monetary policy and supervising American financial institutions.