Changes in Cisco Stock Prices under the Uncertain Interest Rate Policy: Based on ARIMA Model

Abstract

As The Federal Reserve System (Fed) raised the interest rate for 6 times from March 15th until December. The consecutively raise of interest rate by 75 basis points each time throughout the year for 4 times has reached the maximum extent comparing to the past 40 years. Fed interest rate hike not only has impacts on the United States economics, but also bringing different effects globally. As a result, stock price of companies can change accordingly to the interest rate hike. Cisco, as a multinational cooperation technology company first founded in America, is chosen to be analyzed. The data of Cisco stock (CSCO) price from 2021 March to 2022 March is extracted and ARIMA model is used for forecasting stock price in the time series. The study account for the difference between values forecasted by ARIMA and the actual values, and thus observe the impact of Fed interest rate hike on Cisco stock price, further explanations related to the difference. The Fed interest rate hike result in decrease in Cisco stock price.