The Fed's interest rate hike will increase the deposit interest of American depositors and increase everyone's willingness to save. It will appreciate against the US dollar, and investors are more willing to hold the US dollar. In the foreign exchange market, it will be reflected in the strength of the US dollar and the depreciation of other currencies against the US dollar.
From the market point of view, it has controlled the hot money lending that will lead to the financial bubble to some extent, avoided the economic bubble caused by inflation, and protected the status of the US dollar as the world's main reserve currency.
From the investment point of view, the stock market is not optimistic because of the decrease of funds in the market, but for American debt, the yield of American debt will increase.
interest rate hike cycle
1, 1983.3- 1984.9: The policy objective of oil supply shock superposition is vague, and the United States enters a vicious cycle of stagflation. After Walker became the chairman of the Federal Reserve, he took controlling inflation as the core goal, pursued a tough austerity policy, strictly controlled the monetary increment in the early 1980s, and then turned to raising interest rates.
2.1987.1-1989.7: Controlling inflation has gradually become the policy goal of the Federal Reserve, and Taylor rule has been gradually introduced, which has made clear the positive correlation between high inflation and interest rate hike. During this period, the dollar depreciated and inflation rose, and the Fed responded by raising interest rates.
3. 1994.2- 1995.2: It rebounded rapidly after the recession, and the economy and stock market showed signs of overheating. Subsequently, the pace of the Fed's interest rate hike exceeded market expectations, and the bond market experienced great turmoil. During this period, the Fed began to increase its guidance on inflation expectations.