Interest Rate Hikes Research Articles

Changes in Interest Rates and Effect on Economy of the United States Based on the Influence of Covid-19

The change in interest rates always brings some impacts on our life. With the consumption power in China gradually grow up. People should get to know how some financial changes influence the daily lives and how can citizens react to take over it or even earn more benefits. Through the analysis of the American stock market, CPI and FED were summarized the main point to illustrate the reason why the Fed must change it and how the changes affect our life, and how to avoid some of the negative influences. With the market gradually recovering from the impacts of the Covid-19 Americans have been accumulating their interest rate lots of workers lost their job during that period, this paper investigates the so relationship between the interest rate and the unemployment rate. On top of that the price of necessity in that place also getting greater, it also analyzed what's the relationship between necessity and interest rate. This is not only a problem facing the United States, but also an area of greatest concern for people. The results suggest that interest rate hikes will continue and may lead to a more severe economic recession.

The Financial Turmoil Caused by the Fed's Sharp Rate Hike: Reasons, Impacts and Countermeasures

Facing inflation that is gradually getting out of control, the Federal Reserve will start to raise interest rates sharply in 2022. The process of raising interest rates is historic, and the impact is also global. For the financial market in the United States, the stock market is negative, and the bond market is on the rise. Not only in the United States, but the Bank of England has also issued several documents to raise the interest rate of the pound. This article mainly analyzes the impact of China's current round of interest rate hikes and the corresponding monetary policy measures adopted to stabilize China's financial and national economic markets, and hopes that China's RMB can increase its international influence and continue to strengthen the international market after the Covid-19 pandemic is unblocked. To increase the international influence of the RMB through trade can increase the number of countries that conduct RMB transactions directly. Fundamentally reduce the impact of dollar changes on the Chinese economy.

Investor Sentiment in Stocks and Futures Markets

As nations implement interest rate hikes and the economy heads towards a downward trajectory, investor sentiment undergoes a significant transformation. While extensive research has explored how investor sentiment influences stock markets, there is limited investigation into its effects on futures markets. This study aims to delve into various methodologies used to examine investor sentiment, including existed indexes, news analysis, and machine learning techniques. The study will evaluate how investor sentiment influences futures market and explore the connection between futures market and stock market. It acknowledges that there are both similarities and differences in studying investor sentiment in the stock and futures markets and suggests that futures market may play a role in affecting stock market prices. By conducting a thorough review of existing literature, the objective is to enhance our understanding of price dynamics in both the futures and stock markets within the context of the current global economic downturn.

What a Federal Reserve Hikes Interest Rates Effect Bond Price and the Enlightenment to Investors

In recent years, the Federal Reserve's series of interest rate hikes have wielded a profound influence over the intricate workings of financial markets. This article offers a succinct yet comprehensive analysis, beginning with a succinct summary of the repercussions of the increase in the Federal Reserve's interest rates affects both stock market liquidity and the bond market. This paper constructs a ARIMA model to estimate the data which not effected by Federal reserve interest rate hikes. The constructed ARIMA model not only elucidates the direct impact of these monetary policy adjustments on bond prices but also encapsulates the temporal dynamics at play. Through a meticulous examination of various time intervals, the model captures the distinct nuances of monetary policy's influence, reflecting its inherent lag and the intricate interplay with market responses. They extend to investors and policymakers, offering a practical guide for optimizing investment portfolios and shaping effective monetary strategies. As investors navigate the ever-fluctuating financial landscape, a nuanced understanding of the temporal dynamics can aid in crafting informed investment decisions. Policymakers, too, stand to benefit from these insights, as they can harness the model's revelations to formulate timely and precise monetary policies that align with the intricate pulse of the market.

The Impact of the Federal Reserve's Interest Rate Hike on Gold Futures Prices: The Dynamic Trend

This article aims to study how the increase in the Federal Reserve’s Interest Rate is going to impact the gold futures prices under a global economic recession period. Through collecting historical gold prices in chronological order from 2010, the data are then adapted into ARIMA model. It is to investigate the predicted correlation between the macro indicators and performance of the financial derivatives. The result includes that the policy change will have more dominant effects in the long run than short run. The real-world analysis should also incorporate multiple factors that range from qualitative to quantitative to facilitate a more precise prediction of future derivative’s price. The significance of the study is to suggest the time value of policy. Investors who hope to yield long-term return, should pick historical data, and learn the resultant change that happen only a few months after the policy announcement. The authorities should also take note of the intensity of the policy change, trying their best to achieve its economic goal at once, which would avoid rippling vicious effect and panic among the public.

The Prediction of Stock Index and Gold Price Using ARIMA Model

This study uses ARIMA modeling to forecast how the behavior of the US stock market and gold prices following an interest rate hike by the Federal Reserve. This paper also provides valuable decision-making guidance to investors with respect to the stock market and gold price indices. The primary dataset utilized in the methodology section revolves around the S&P 500 Index, whereas the secondary dataset mainly focuses on gold Price. Based on these findings, it is projected that the S&P 500 will experience a decline over the next three months, while gold prices, on the contrary, are expected to witness an increase. Based on these findings, it is recommended that investors allocate a larger proportion of their investment towards gold, while simultaneously reducing their exposure to stocks in the foreseeable future. This strategic approach aims to optimize potential gains and mitigate risks, aligning with prudent investment practices in a volatile market environment.

The Impact of CPI and Unemployment Rate on Economic Growth: Based on TVP-VAR Model

Inflation has a significant impact on economic growth and monetary policy. In recent times, the US economy is facing the threat of high inflation, and the Federal Reserve has been continuously adopting interest rate hikes, which have an impact on the economy and finance. And the relationship between inflation and unemployment rate is a trade-off, so this article studies the impact of CPI and unemployment rate on the US economy. This artic le uses the US CPI and unemployment rate from 1948 to 2009 to construct a VAR model, predicts the final ten periods, and compares them with actual values. Using US CPI, unemployment rate, and GDP data from 1948 to 2009, construct a TVP-VAR model to analyze the impact of inflation and unemployment rate on economic growth.

The impact of Federal Reserve Interest Rate Hikes on the Systemic Risk of the U.S. Banking Industry: Based on Semi-Parametric Vine Copula SCCA Model

We use the Vine Copula SCCA model to measure the systemic risk of the US banking industry, and compares the impact of two different events, external risk and Fed rate hike on systemic risk. The results demonstrate that the systemic risk of the US banking industry reached its peak when affected by external shocks (2020) but was quickly released by market rescue measures. When the Fed raised interest rates consecutively in 2022, large banks showed good resistance to risk, but the joint default risk of small and medium-sized banks remained at a significant level for a long time, indicating that interest rate hikes may have increased the systemic risk of the US banking industry. US banking industry should maintain good risk management and prudent operation, and the regulatory intensity they receive also needs to be strengthened.

Analysis of Influencing Factors on the Fluctuation of RMB-Dollar Exchange Rate in 2022

This paper explores the influencing factors of the fluctuation of the exchange rate of RMB against the US dollar in 2022. By summarizing the past research results of scholars, trying to use empirical models from the micro perspective, and analyzing the actual situation in connection with the four phases of RMB-dollar exchange rate fluctuations in 2022, the final study concludes that the fluctuations of the RMB-dollar exchange rate in 2022 are related to the events such as high-frequency interest rate hike of the Federal Reserve, the new Crown Pneumonia outbreak, and the conflict between Russia and Ukraine.

The Economic and Financial Impacts of Feds Rate Hikes: Emerging Economy, Financial and Commodity Markets

With the fed rate hikes recently, there are many economic and financial impacts caused by it around the world. This article mainly studies the economic and financial impacts of the Fed's interest rate hike on the world, and give some relevant policies and suggestions. The Fed's interest rate hike has a huge impact on all economies around the world, especially emerging economies. At the same time, it has had a great impact on the global foreign exchange market, commodity market, and capital market. Since the Federal Reserve is in the process of raising interest rates unprecedentedly in history, the impact of this rate hike on the world is also different and deeper than before. By researching on the economic and financial impacts of the Fed's interest rate hike, this article aims to understand the Fed's interest rate hike behavior, predict the global economic situation to a certain extent and help to make better decision.

The Impacts of the Feds Interest Rate Hike on Canada: Financial Markets and Prospect of International Companies

Canada is not only a geographic neighbor of the United States, but also one of its most important trading partners. The Fed's interest rate hike has had many effects on Canada, not only in terms of its impact on financial markets, but also in terms of its impact on international trade. This paper will discuss the perspective of financial markets, the impacts of the Fed's interest rate hike on the exchange rate market, the stock market and the bond market. In terms of international trade, Cenovus Energy Inc. will be taken as an example to study the impacts on international trade between the two countries based on the existing background from 2020 to 2022 because during the past three years, there were the period that the Fed did not adjust interest rates and the period that the Fed raised interest rates suddenly. Finally, conclusions will be drawn from the above analysis, and some recommendations for Canadian monetary authority, multinational corporations, and investors will be given.

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

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.

Dynamic Changes in US Financial Market under Fed's Rate Hike: Past, Present and Prospect

In March 2022, the Federal Reserve began a new round of interest rate hike. Until February 2023, Jerome Hayden Powell, the incumbent chairman of Fed, still indicated that the continuation of the interest rate hike policy is still appropriate. Many significant changes have occurred in the financial markets over the past year, however, limited information is currently available to analyze the impact of the new round of Fed rate hike policy. This paper analyzes data of the U.S. dollar index, the Nasdaq 100 index and multiple secondary sources, applies economic principles such as the J-curve effect, cites examples from Japan, Sri Lanka and China, and finds that the U.S. financial market is in an overall sustained tightening state under the interest rate hike policy, and the international financial market will have to cope with more debt and trade challenges. This papers analysis is of great reference value to the investment decisions of the government, banks, enterprises and individuals.

Feasibility Analysis of the U.S. Federal Reserve Achieving Soft Landing

At present, the United States is witnessing an unprecedented level of inflation, which has not been observed in the past 40 years. To navigate the economy, the US Federal Reserve has opted to raise interest rates. This paper provides an in-depth analysis of the potential impacts of the Federal Reserve's policy, drawing upon a wide range of forecasts from economists across various fields and perspectives to present a comprehensive picture of the situation. The central question is whether the US economy will be able to achieve a "soft landing", as anticipated by the Federal Reserve, or whether it will ultimately enter into a recession. In the event of a recession, the paper delves into the severity and duration of the potential downturn, providing insight into what Americans may expect. Given the United States' critical role in the global economy, the Federal Reserve's policy decisions have far-reaching effects. Therefore, comprehending the possible results and consequences of the current interest rate hikes is vital for policymakers and ordinary citizens alike.

Portfolio Optimization under the Background of Continued Interest Rate Hikes

In the process of investment, the primary investment objectives for investors are undoubtedly risk minimization and return maximization. This paper fo-cuses on the US investment market and, in the context of the Federal Re-serve's continuous interest rate hikes, avoids the currently popular artificial intelligence sectors, and focuses on the analysis of representative stocks in the manufacturing, pharmaceutical, technology, and financial industries. This paper selects 10 stocks from the above-mentioned industries for analy-sis. This paper collects stock prices, financial data (including P/E ratio, BPS, etc.), risk-free rates, market indices, and other data, and uses multiple linear regression models to predict the return data from January 1st, 2023, to March 10th, 2023. Next, the mean-variance framework is employed for the purpose of selecting both the portfolio with the highest Sharpe ratio and the one with the lowest volatility. Once the weights for both groups are ob-tained, this study tests the portfolio's performance using actual stock price data spanning from January 1st, 2023, to March 10th, 2023. After obtaining the performance data of the two groups, this paper further compares the per-formance of the portfolio with the 1/N portfolio and the market performance. The results show that the market performance is the best, followed by the 1/N portfolio and the minimum volatility portfolio, and the maximum Sharpe ratio model is the worst. This result may provide some guidance for portfolio management for some investors in this special period.

Chronicles of Debt Crises Foretold

ABSTRACTThe debt crises looming in developing countries are being exacerbated by changing debt composition. Declining net foreign exchange earnings have worsened their predicament. As concessional development finance declined, many governments turned to riskier forms of borrowing from international capital markets. Concerted interest rate hikes are supposed to stem inflation; however, given that prices have mainly risen due to supply chain disruptions caused by war, sanctions and pandemic, interest rate increases are likely to trigger more debt crises, much worse than before. Current discourses, for example about China's ‘debt trap’ diplomacy, distract from urgently needed international and national measures to avert the looming debt crises.

Heterogeneous international monetary transmissions: The role of inflation

In the context of the trilemma hypothesis, we document heterogeneous international monetary transmissions, emphasizing the essential role of inflation. Periphery countries' monetary policy autonomy is subject to their inflation. Facing an interest rate hike of a center country, periphery countries are more willing to follow when their inflation levels are high. Following an interest rate hike helps ease periphery countries' domestic inflation pressure. In contrast, those countries with low inflation are more inclined to follow the center country's interest rate cut. We further confirm that periphery countries' monetary policy autonomy is enhanced by capital controls and flexible exchange regimes, consistent with the trilemma hypothesis.

The US banking crisis in 2023: Intraday attention and price variation of banks at risk

After interest rate hikes by the FED, the market value of long-duration assets has declined, which in March of 2023 led to a distress of banks subject to a sudden increase in deposit withdrawals. First, Silicon Valley Bank and Signature Bank were subject to such runs and were taken over by the FDIC, while First Republic Bank by JPMorgan Chase in May of 2023. We date the crisis-period and show that increased Twitter-based attention is related to an increased price variation of banks at risk. Our results imply that during crisis periods, pricing can be improved by incorporating attention-based measures.

The Impact of the Fed's Interest Rate Hike on the Financial Industry: Focusing on the Exchange Market and Capital Market

Since the outbreak of the Covid-19 epidemic, the Federal Reserve has implemented extremely loose fiscal and monetary policies, which has exacerbated the inflation problem in the United States. To combat high inflation, the Fed began raising rates in March 2022. This paper evaluates the impact of the Fed rate hike on the US financial sector, as well as on the foreign exchange market and the global capital market. The study found that higher interest rates could lead to higher interest rates in the interest rate market, and money would also flow from the stock market to the bond market, dealing a huge blow to banking funds. The paper also assesses the pace and magnitude of rate hikes and concludes that the Fed needs to slow and narrow the pace of rate hikes to prevent too fast and too large a rate hike from potentially causing chaos in the domestic financial sector.

Canada's Economic Situation and Policy Analysis in the Current Inflation

Since 2022, the global energy prices have been increasing, leading to a rise in the price index. This has resulted in inflationary pressures in major economies such as Canada, leading national governments to implement interest rate hikes as a coping strategy. This paper focuses on the Canadian economy and analyzes its inflation performance, strategies for raising interest rates, the price level, and the labor market. Using economic data from Canada, the Commonwealth of Nations, and past literature, the study finds that Canada's inflation performance is not satisfactory. The paper argues that inflation cannot be fundamentally curbed by using a single monetary policy instrument, such as interest rate hikes, and that an effective economic response requires a combination of monetary and fiscal policies. Additionally, the paper suggests that Canada should develop and improve industrial policies consistent with its national endowments, labor and immigration policies that match industrial policies, and trade policies that are effective in fighting inflation.