Advances in Economics, Management and Political Sciences

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Proceedings of the 7th International Conference on Economic Management and Green Development

Series Vol. 30 , 10 November 2023


Open Access | Article

The Global Effect of Fed Rate Hikes: Stocks, Bonds, and Foreign Exchange Markets

Haochen Ni * 1
1 Shanghai Concord Bilingual School

* Author to whom correspondence should be addressed.

Advances in Economics, Management and Political Sciences, Vol. 30, 144-151
Published 10 November 2023. © 2023 The Author(s). Published by EWA Publishing
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Citation Haochen Ni. The Global Effect of Fed Rate Hikes: Stocks, Bonds, and Foreign Exchange Markets. AEMPS (2023) Vol. 30: 144-151. DOI: 10.54254/2754-1169/30/20231461.

Abstract

On 23rd March 2023, the Federal Reserve has once again increased its federal funds rate. The policy is published aim for reduce the high inflation rate in the US and prevent once again getting into a recession just like in 2008. This brings both advantages and disadvantages to both the domestic and foreign economies. In this paper, some basic impacts are explained including effects on consumption and investment decisions, stocks and bonds markets, and international relations. As the rise in interest rate increases cost of borrowing and discourages speculation, generally, economic activities are reduced. At the same time, this gives foreign countries heavy pressure by creating outflows of investment funds. Looking forward to the future, it is still possible for the Fed to keep raising its interest rate. To prevent further damages, foreign countries may use expansionary fiscal policy as it can stimulate consumption and investment, and most importantly, bring possibilities of improved economy potential.

Keywords

federal reserve, interest rate, stock market, bond market, exchange rate

References

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3. R. Kozlov. (2023) The effect of Interest Rate Changes on Consumption: An Age-Structured Approach. Economies 2023, 11:23, 1-25.

4. Manuel Leon Navarro & Navarro, R. Frutos, (2012) Consumption and housing wealth breakdown of the effect of a rise in interest rate, Applied Economics, 44:16, 2091-2110, DOI: 10.1080/00036846.2011.558484.

5. E. Durante, A. Ferrando, P. Vermeulen. (2022) European Economic Review, Monetary policy, investment and firm heterogeneity, 148: 1-45.

6. Financial Industry Regulatory Authority. (2022) Brush Up on Bonds: Interest Rate Hike and Duration. https://www/finra.org/investors/insights/bonds-interest-rate-hikes-duration.

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Data Availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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Volume Title
Proceedings of the 7th International Conference on Economic Management and Green Development
ISBN (Print)
978-1-83558-081-3
ISBN (Online)
978-1-83558-082-0
Published Date
10 November 2023
Series
Advances in Economics, Management and Political Sciences
ISSN (Print)
2754-1169
ISSN (Online)
2754-1177
DOI
10.54254/2754-1169/30/20231461
Copyright
© 2023 The Author(s)
Open Access
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

Copyright © 2023 EWA Publishing. Unless Otherwise Stated