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Fed rate hike

1. Federal Reserve

The Federal Reserve System (Fed) is responsible for performing the duties of the United States central bank. The Federal Reserve is a privately-owned bank, and all its shares are privately owned. It exercises the responsibility of formulating monetary policy and supervising American financial institutions.

2. The Federal Reserve raised interest rates.

The Fed's interest rate hike means that the Federal Reserve Management Committee decided to adjust monetary policy and raise the federal funds rate after the interest rate meeting in Washington. Simply put, raising interest rates is a tight monetary policy, and the purpose of raising interest rates is to reduce inflationary pressure.

3. What is the interest rate for raising interest rates?

The interest rate hike here is to raise the federal funds rate in the United States. Don't get me wrong, this is not the interest on our deposits, but the interest (interbank lending rate) that banks temporarily lend to each other to cope with the temporary shortage of deposit reserves required by the central bank. The purpose of raising interest rates is to raise the interbank lending rate in the market as a whole and keep it within a certain range.

4. Why raise interest rates?

If explained in one sentence, preventing inflation and bubbles is the main reason for raising interest rates, which can control the soaring prices and prevent the risk of asset bubbles bursting.

5. The impact of the Fed's interest rate hike

(1) The Federal Reserve raised interest rates, the total circulation of US dollars decreased, the US dollar appreciated, there was a global shortage of US dollars, the assets of other countries depreciated rapidly against the US dollar, domestic prices rose, assets depreciated, and capital fled, which led to the financial crisis. American capital can March in, buy other countries' assets, control the economic lifeline of other countries, and even create political turmoil in the local area, launch a color revolution, and support the puppet regime-this is obviously beneficial to the interests of Wall Street and also helps to foster the puppet regime. This is also an important reason for the Fed to raise interest rates.

(2) Fed's interest rate hike will reduce the amount of money in the market, and less money will enter the stock market, which will have a great impact on US stocks.

(3) The Fed's interest rate hike will lead to the appreciation of the US dollar, which will also affect the competitiveness of US exports, as well as the export income and trade balance of other countries.

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

The primary impact of the Fed's interest rate hike on China is capital outflow and RMB depreciation. In addition, the longer-term worry is that the Federal Reserve will raise interest rates or plunge the US economy into recession, which will hit China's exports, which is not conducive to China's economic growth.

At present, the primary problem of China is to stabilize economic growth, which is also the most important macroeconomic policy goal of China. In this case, in addition to the expansionary fiscal policy, China must also implement an expansionary monetary policy, and the central bank must keep interest rates low, or even lower them further.

Yu Yongding emphasized that China is one of the largest creditor countries in the United States, and China must pay attention to the balance of payments and its external sustainability. I hope that in the coming year, China and the United States can strengthen policy coordination so that both countries can overcome the current economic difficulties.