Professor of Singapore National University: The irresponsible economic policy in the United States affects the world

Xinhua News Agency, Singapore, August 4th (Reporter Cai Shuya) Lu Yaoqun, Director of the Institute of Governance and Sustainable Development, Singapore's National University of Commerce, said in an exclusive interview with Xinhua News Agency that the United States recently raised interest rates frequently and tried to solve its domestic economic problems. But the entire world is paying for the US's irresponsible behavior and burden.

In order to control the high level of inflation, the Fed announced the 75 basis points of interest rate hikes at the end of July and adjusted the federal fund interest rate target range to between 2.25%and 2.5%. This is the fourth interest rate hike this year, and it is also the second consecutive interest rate hike 75 basis points, which is the largest concentrated interest rate hike since the early 1980s.

Lu Yaoqun said that from the overall perspective, interest rate hikes also have a certain negative impact on the US economy. First, business costs will increase. Rising interest rates means rising financing costs, and many economic activities will decrease, which will cause employment opportunities and business opportunities to lose. Secondly, stock prices will decline due to rising interest rates, which will shrink the asset value of many investors.

Lu Yaoqun pointed out that the Federal Reserve's interest rate hikes not only affect the US economy, but also bring more serious negative impacts to other countries. Rising US interest rates will cause a large amount of capital to flow out of countries outside the United States, leading to the depreciation of currency and debt costs of these countries.

Lu Yaoqun said that the root cause of this situation today is the poor economic management. First of all, before and during the new crown epidemic, the United States injected a lot of funds into the market to stimulate the economy, resulting in an increase in market demand for goods. However, due to problems such as global supply chain interruptions, market supply cannot cope with increased demand, which causes inflation.

Secondly, the United States increased tariffs for protectionism, which led to rising goods and services imported from overseas. To some extent, this is one of the reasons for the intensification of American inflation, and the intensification of American inflation has a impact on the world economy.

"Therefore, the irresponsible economic policy of the United States not only causes trouble to itself, but also affects the world." Lu Yaoqun said.

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