US Hikes Interest Rate to 5.5% from 5.25%
Ever since the United States took the lead in announcing an interest rate hike in December 2015,the impact on various economies around the world has become increasingly evident with each successive rate hike by the U.S.In August 2024,the U.S.announced yet another interest rate hike,this time by 25 basis points,raising the interest rate from 5.25% to 5.5%.Although the Federal Reserve views this as a measure to combat high inflation and an overheating economic recovery,it implies financial turmoil and shocks on a global scale and has also led market participants to worry about the global economic outlook.
What is the true intention behind the United States' frequent interest rate hikes?What problem are they trying to address with these actions?The real intention behind the interest rate hikes.
The Federal Reserve,as the central bank of the United States,makes decisions that directly affect the development and stability of the world economy.Since announcing the start of interest rate hikes in December 2015,the Federal Reserve has made multiple adjustments to interest rates,often accompanied by debt risks in countries around the world.However,the U.S.does not consider this a wrong decision but insists that it is a necessary measure to address inflation and economic recovery.After all,as the world's largest economy,the state of the U.S.economy cannot be overlooked.
In November 2023,the U.S.inflation rate reached its highest level in 40 years.This has put immense pressure on U.S.authorities and the central bank,especially on July 28,2023,when the Federal Reserve announced a 25 basis point cut in the federal funds rate.
However,this rate cut did not achieve the expected effect and instead led to further inflationary pressure.
This forced the Federal Reserve to change its strategy again and decide to start raising interest rates to curb inflation.
So in August 2024,the Federal Reserve announced again that it would raise the interest rate from 5.25% to 5.5%,which is already the second rate hike this year.
But the U.S.did not stop there,they even plan to raise interest rates again 3-4 times this year.
For such frequent interest rate hikes,some people believe that the U.S.wants to solve its debt crisis of up to $35 trillion by raising interest rates.
Some people believe that there are deeper considerations behind the U.S.move.
Frequent interest rate hikes to solve economic problems.
When many media reported on this frequent interest rate hike,some media expressed doubts about it.
They believe that the U.S.economy is currently facing multiple challenges,including inflation,sluggish job market and other issues.These issues are essentially all related to the COVID-19 pandemic.
They are concerned that this move by the United States may further affect global economic stability.
Nevertheless,the U.S.authorities still insist that frequent interest rate hikes are a necessary step in dealing with inflation and economic recovery.They believe that raising interest rates can effectively control inflation and further stimulate economic growth in the United States.
But in fact,this cannot solve the fundamental problems.
The issues of reduced consumer spending by ordinary people within the United States and the decline in everyone's purchasing power should not be overlooked.
Although raising interest rates can suppress inflation to a certain extent,it will also further suppress consumer demand.
Especially industries such as automobiles and real estate will face huge challenges.
Auto loans and mortgages are important financial services to ensure the basic needs of people's lives.
When they encounter difficulties,ordinary people will face greater life pressures.
In summary,relying solely on raising interest rates cannot solve complex economic problems.
On the contrary,frequent interest rate hikes may lead to more severe chain reactions and risks.
What do others say?
It was reported that this matter was covered on August 19th.
The report stated: "So far this year,the Federal Reserve has implemented two interest rate hikes and plans to raise rates another 3-4 times within the year.
This is precisely because of the many issues they have observed."
It also pointed out: "In recent years,the global inflation rate has generally been on the rise," and "major economies such as China and Europe have expressed their concerns about this."
Even the president of "Djibouti" stated: "The frequent interest rate hikes by the United States have not only affected global economic stability" and claimed that "the Federal Reserve's actions have directly led to debt crises in various countries."
It is evident that the impact of frequent interest rate hikes extends far beyond this.
So,against this backdrop,how will China respond?
Currently,our country is facing the issue of "housing for living,not for speculation,"As the real estate market continues to boom globally,especially in regions such as Europe,where housing prices are still on the rise,what challenges will China's real estate market face?In response,China's central bank has timely adjusted its policies and stabilized the financial market through measures such as lowering reserve requirements and interest rates,effectively curbing asset price bubbles.At the same time,Chinese authorities have introduced a series of policies to regulate the real estate market,including continuing to adhere to the principle of "houses are for living in,not for speculation".Strengthening land supply management,
Regulating the behavior of real estate companies,etc.
In terms of fiscal policy,
The authorities will continue to implement proactive fiscal policies,
And increase support for key areas such as small and micro enterprises and individual businesses.
In terms of foreign policy,
Our country will continue to commit to promoting the construction of a community with a shared future for mankind,
And actively participate in the reform and construction of the global governance system.
The author believes
Although our country is currently in a complex and severe external environment,But I believe that through the joint efforts of the whole society,
we will certainly be able to overcome various difficulties and challenges,
and achieve stable economic growth and long-term harmonious development of society.
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