The History of Fed Interest Rate Hikes and the Impact on Stock and Foreign Exchange Markets

Abstract

Following COVID-19, America uses policies to boost its economy, inadvertently pushing inflation from 2018 to 2022. This paper discusses the history of the Federal Reserve rate increase and its repercussions on financial areas, especially on the stock and foreign exchange markets. The main analysis centers on the impacts of the markets and behaviors of the answers. Initially, the Federal Reserve rate increase seemed economically beneficial. However, long-term effects may negatively impact both domestic and international economies to some degree. By examining historical data, this paper dissects the rationale behind such moves and their direct outcomes. This offers a better perspective on potential future interest rate influences. For investors, to be positive and need to adjust their investment strategies to adapt when they face the Federal Reserve rate increase. For policymakers, during the fluctuations in interest rates, they need to maintain the global equilibrium as far as possible, without excessive disruption or impact.