Expert analysis: The limited effect of the US suspending interest rate hikes on global financial markets continues to put pressure on the Federal Reserve | Meeting | United States
The Federal Reserve Board of the United States concluded its two-day monetary policy meeting on the 14th and announced that the target range for the federal funds rate, which ranges from 5% to 5.25%, will remain unchanged. This is the first time since March 2022 that the Federal Reserve has suspended interest rate hikes for 10 consecutive times.
The Federal Reserve stated in its statement that recent indicators indicate that US economic activity continues to expand moderately, but inflation rates remain high. To support achieving maximum employment and a long-term inflation target of 2%, the Federal Reserve has decided to maintain the target range of the federal funds rate unchanged, allowing the Federal Open Market Committee of the Federal Reserve to evaluate more information and its impact on monetary policy.
The economic outlook forecast released by the Federal Reserve on the same day showed that the median forecast of the federal funds rate by Federal Reserve officials for this year has risen from 5.1% in March to 5.6%, indicating that interest rates will continue to rise this year.
Federal Reserve Chairman Powell stated at a press conference that almost all members of the Federal Open Market Committee expect further interest rate hikes this year to be appropriate. The Federal Reserve has not yet made a decision on whether to raise interest rates at the July monetary policy meeting.
The US suspension of interest rate hikes has limited impact on curbing inflation and boosting the economy
Regarding the decision of the Federal Reserve to suspend interest rate hikes, Li Fuyi, Associate Researcher at the Institute of Foreign Economics at the Chinese Academy of Macroeconomics, believes that suspending interest rate hikes does not mean the end of the Federal Reserve's interest rate hike cycle. At the same time, suspending interest rate hikes has limited positive effects on both curbing high inflation in the United States and boosting the US economy.
The current high interest rates of the Federal Reserve are putting pressure on global financial markets
For a long time, the Federal Reserve has been using monetary policy tools to continuously "harvest" world wealth, bringing significant negative impacts to the global economy. Despite the Federal Reserve's announcement of suspending interest rate hikes and maintaining the current federal benchmark interest rate, the previous ten consecutive rate hikes have already pushed interest rates to high levels.
Experts believe that in the current high interest rate environment, global financial markets are constantly under pressure, and the time lag effect of monetary policy will prolong its impact. At the same time, the spillover effects of the Federal Reserve's monetary policy are already impacting the development of fragile countries, affecting their sustainability, and dragging down global economic recovery.
Li Fuyi, Associate Researcher at the Institute of Foreign Economics of the Chinese Academy of Macroeconomics: The current interest rates are already at a relatively high level, causing the world economy to operate in a high interest rate environment and continuously putting pressure on the global financial markets. The US monetary policy is more focused on its own current interests, at the cost of dragging down the overall global economic recovery.
The Federal Reserve announces maintaining the federal funds rate unchanged>>