The Influence of the Federal Reserve System Interest Rate Hike on Tesla: Empirical Research Based on ARIMA Model

Abstract

On 23 March 2022, the Federal Reserve System announced interest rate hikes and increased 25 basis points. After that, a series of negative monetary policies were carried out. Tesla CEO stated that the price of cars must be reduced when interest rates rose sharply. This means that Tesla's stock price will continue to decrease. The 25 -basis points raised the rate of interest rates and the highest interest rate reached 5 % to respond to inflation. The rate hikes of The Federal Reserve System have a great impact on the world. This article selected all stock data from Tesla from the listing to August this year (including daily data, weekly data, and monthly data) and uses ARIMA model to model and analyses the data. It will compare with the actual value of the Federal Reserve System. According to the study, the trend of the decline in stock prices after the RECERAL Reserve System raised interest rates is the same as the trend of research prediction in this article. Its interest rate hikes will cause Tesla's stock price to fall.