The Fed's radical rate hike disturbing the world, industry insiders: may lead to a global economic recession!

[Global Times special reporter Zheng Ke Global Times reporter Ni Hao and Wang Yi] In order to fight against the worst inflation in the United States in 40 years, the Federal Reserve Commission announced on the 15th that it would raise 75 basis points for a single interest rate hike, which will further raise interest rates in the future. This is the largest interest rate hike since the Federal Reserve since 1994. After the opening on the 16th, the United States and European stock markets plummeted. What is even more worried about the market is whether the radical interest rate hike behavior of the Federal Reserve will cause the US economy to fall into decline and drag the world. Government of Europe, Japan, and South Korea expressed their attention to the impact of the Fed's interest rate hike on the economy on the 16th. Many media and expert predictions show that the possibility of the US economy falling into decline is getting greater. The Federal Reserve released the latest economic prospects on the 15th that the total US economic volume in 2022 is expected to increase by 1.7%, a 1.1 percentage point of 1.1 percentage points from the forecast in March. In 2021, the growth rate of GDP (GDP) in the United States reached 5.7%. The US economy was a capital that Biden boasted, but now it has become a tricky issue that plagues him. Reuters said on the 16th that with the rise in goods such as food and gasoline, American families have been under pressure, and people's grievances have increased. Inflation has become the most urgent economic problem in the Federal Reserve, and has begun to control the political change bureau. Bloomberg believes that the economic recession caused by the Federal Reserve ’s interest rate hike may break the victory of the Democratic midterm elections and the second term of Biden.

"At all at all costs to suppress inflation, the US economy is increasingly difficult to land."

According to the Wall Street Journal, on the afternoon of the 15th local time, Fed officials announced the two-day policy meeting that they announced their interest rate hikes 75 basis points to increase the interest rate of the benchmark federal fund to 1.5%-1.75%. It is worth noting that this is the third interest rate hike this year. In the previous March and May, the agency had raised interest rates 25 and 50 basis points respectively. It is reported that the Federal Reserve expects that the interest rate of the benchmark Federal Fund will reach 3.25%to 3.5%before the end of the year -this will be the highest level in the United States since 2008.

The Federal Reserve President Powell said at a press conference on the 15th that the 75 -basis points of interest rate hikes were "abnormal" adjustments, but it would not be normal. After studying economic predictions and the performance of the US economy, the committee believed that this was "there is a" there is a "there is any way necessary". He also said that at the end of July, the Fed may raise interest rates steadily by 50 to 75 basis points in order to "firmly bring the inflation rate back to the target of 2%". "We must restore the stability of prices. . Without the price stable, the economy will not run as expected. "

A report released by the US government last week showed that the inflation rate in the United States in May reached 8.6%. This data brings great shocks to the market and triggers market selling. The US "political" website on the 15th believes that the Fed's behavior shows that the agency will control inflation at all costs, even if it hurts the US economy. Powell said on the 15th that a significant interest rate hike was not trying to induce economic recession, but it was becoming increasingly difficult to achieve "soft landing". The Wall Street Journal believes that this comment is equivalent to vague recognition that with the tightening of monetary policy, the risk of downturn in the US economy has risen.

The Federal Reserve's decision quickly influenced other countries around the world. The European Central Bank announced on the 15th that it will create a new tool while raising interest rates to protect the fragile economies in the euro area. Matsuni Kako Matsuni, the official house of Japanese cabinet, said on the 16th that it will pay attention to the impact of the Fed's interest rate hike on the economy. According to the Yonhap News Agency, South Korea ’s finance, currency, financial regulatory authorities and institutions have met on the 16th to examine the current domestic economic situation and discuss the impact of the Fed’ s large interest rate hike on foreign exchange and financial markets. South Korean Deputy Prime Minister and Minister of Planning Treasury Qiu Qinghao said that the Federal Reserve ’s interest rate hikes, the continuous and unstable supply chain of the Russian and Ukraine war, and the unstable supply chain are superimposed to form the current composite economic crisis. It is expected that the difficulties will continue for a long time. Market volatility may increase.

"As the central banks around the world take similar measures, this marks great changes in the global economy." BBC said on the 16th. Dako, chief American economist at Oxford Economic Research Institute, said that most developed economies and central banks and some emerging market central banks have recently tightened monetary policy simultaneously. "This is the global environment that we are not used to in the past few decades. This It will have an impact on the commercial sector and consumers around the world. "

India's "Printing News" criticized on the 16th that the Federal Reserve raised 75 basis points at one time, which is the latest one of its series of mistakes. The agency last year that the US high inflation rate was "short -lived." It is reported that the wrong policy of the central bank's radical interest rate hike may disrupt the market and destroy the economic recovery after the epidemic. A survey by the British "Financial Times" and the University of Chicago on economists showed that nearly 70%of the respondents believe that the US economy will fall into a decline next year.

"Economic recession will break the second term of Biden"

Because the US stock market and bond market have digesting the Federal Reserve's sharp interest rate hike in advance during the plunge in the previous few days, the market response appeared "lag" after the losing landing on this name. On the 15th, the three major U.S. stock indexes rose collectively, but plummeted after the opening on the 16th. As of the evening of this newspaper, the Nasdaq comprehensive index plummeted by about 4%. The European stock market also fell sharply after the opening on the 16th, and the German DAX index fell 3.3%. Reuters said that after the Fed announced its interest rate hike, the exchange rate of the US dollar was basically stable on the 15th of the exchange rate of other currencies on the 15th, and it began to decline on the 16th. Analysis generally believes that inflation problems will not be quickly resolved due to the Fed's interest rate hike. The Associated Press said on the 15th that inflation has spread to various fields of the US economy and did not show signs of slowing down. The American people also expect that high inflation will last longer. It is reported that in the months before the mid -term elections in Congress, inflation has become the most concerned issue for American voters, which has worsened the public's view of the economy, weakened the support rate of Biden, and increased the Democratic Party's defeat in November in November. possibility. The latest polls announced by Reuters and Yippso on the 15th showed that Biden's support has decreased for three consecutive weeks to 39%.

"The United States faces the economic recession caused by the Federal Reserve, which may make Biden lose the second term." Bloomberg said straightforward on the 16th. According to the latest estimates of the Bloomberg Institute, the possibility of the US economy from falling into recession in early 2024 is close to 3/4, which has no signs a few months ago. It is reported that in the history of the United States, from Jimmy Carter to George H. W. Bush to Trump, every unsuccessful president is affected by economic recession or other economic problems. "This prospect is It has caused turbulence in the Biden camp. " It is reported that the Biden government is currently looking for all the solutions to open the box, from considering the profit tax tax on the profit of petroleum dealers, to the request for US retailers to commit a promise -if the government cancels the tariffs on Chinese goods, they It will reduce the price of goods.

Biden's approach to the inflation problem caused the media criticism. The United States CNN (CNN) said on the 15th that presidents often blame high inflation on external factors such as supply chain interruptions caused by the epidemic of Russia and new crown pneumonia, but refusing to acknowledge his huge stimulus policy is the culprit. PetroChina rejected Biden's remarks on their responsibility for the soaring oil prices.

"The Fed's approach may lead to a global economic recession"

The British "Guardian" said on the 16th that the Fed's actions will increase the pressure of the central bank around the world.

On the 16th, the Hong Kong Financial Authority automatically followed the Federal Reserve to increase the benchmark interest rate to 75 basis points to 2%, while Bank of England announced the interest rate of 25 basis points on the same day to 1.25%. This is the fifth interest rate hike since December last year.

The US CNBC website said on the 16th that the Fed's radical policy will have a global impact, first of all, it may trigger a global economic recession. Jingsun Global market strategist Christina Hopper said, "given that the Fed is a global central bank to a certain extent, its practices will promote the global economic recession, which seems to be reasonable." "Considering that monetary policy is a dull device, not a surgical tool, it is an extremely subtle balanced behavior to cool down to cool and inflation, but it does not cause recession."

Wu Chaoming, deputy dean of the Caixin Research Institute, told the Global Times reporter on the 16th that the Federal Reserve ’s tough interest rate hike will drive the continuous contraction of global liquidity and exacerbate the volatility of the capital market. Affected by factors such as the Russian -Ukraine conflict and the impact of the epidemic, the current global economy has weakened sharply, inflation has risen rapidly, and the fragility of the financial market has increased significantly. In the context of the recovery of the global economy, the global liquidity caused by the Federal Reserve's tough interest rate hikes has further shrunk, bringing new challenges and uncertainty to the current severe global economy and financial situation. Global will face high interest rates and high inflation in the short term The situation of high debt and low growth. In this context, the global stocks, bonds, and exchange market fluctuations may increase significantly, cross -border capital flow may be more unstable, and global financial risks tend to rise.

75%, this is a number given by a US -investment company manager in an interview with CNBC on the 16th that the global economy has fallen into a decline. However, the person also believes that the degree of recession may be slightly milder under the linkage between the Fed and the central banks around the world.

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