Analysis of the Impact of the Fed’s Interest Rate Hike Policy Based on the Triple Exponential Smoothing Method

Abstract

The US has been employing quantitative easing and printing money for more than a decade, fueling inflation while lifting government debt. To deal with the high CPI, the Federal Reserve (Fed) has resorted to a policy of interest rate hikes, especially in the past two years, when the US interest rates have been on an upward trend. This has led to divergence in the economic trends and policy directions of countries, with China facing a more complex and severe external environment. In this connection, first of all, this paper gathers the response policy of each country during the Fed’s interest rate hikes, makes qualitative analysis of those response policies, and provides pertinent suggestions for China’s economic activities based on its national realities. Then, this paper collects data on the US interest rates, CPI, changes in nonfarm payrolls, monthly rate of retail sales, ISM manufacturing index, and ISM non-manufacturing index starting from January 2022 to December 2023, builds a model using the Triple Exponential Smoothing Method and applying statistical analysis, and solves it with python programming. Finally, the paper analyzes changes in the macro-indicators of the results and forecasts data on each indicator for the next six months to derive the trend of the data on indicators concerning future interest rate hikes. By predicting the impact of future events on China’s economy, investment, foreign trade and other aspects, the author expects the country to make corresponding regulatory plans and policy reserves.