The Trend and Spillover Effect of Fed's Interest Increase Policy

Abstract

Since 2022, the Federal Reserve has started a new round of rapid rate increase process due to the continuous rise in inflation. However, due to the combined effects of the epidemic and the conflict between Russia and Ukraine, the impact of the current Fed rate hike on the global economy and finance is different from previous cycles. Based on the recent stance of the Federal Reserve, the market generally judges that the current round of interest rate increase cycle of the Federal Reserve has come to an end. This paper discusses when and how the Federal Reserve will cut interest rates. At the same time, relevant suggestions are put forward on how to prevent the spillover effect of the Fed's interest rate hike. Through way of qualitative analysis, the author believes in how to balance the three goals of inflation elimination, employment stabilization and financial stability, or the main line of the monetary policy decision of the Federal Reserve in the future.