Xinhua News Agency, Beijing, October 1. Summary: The global negative spillover from Fed rate hikes continues to expand
Journalist of the Xinhua news agency
Affected by continued aggressive US Federal Reserve interest rate hikes, under the pressure of intensified inflation and depreciation of local currencies, many countries have recently followed the Fed’s pace to raise interest rates and spillover effects. Fed interest rate negative hikes continued to expand.
The Fed announced last week that it will increase the target range for the federal funds rate by 75 basis points to a range of 3% to 3.25%. This is the Fed’s third consecutive rate hike of 75 basis points this year. Before and after the Fed rate hike this time around, central banks in some countries and regions drastically raised interest rates.
This week, the Central Bank of India announced on its official website that it will raise the benchmark interest rate by 50 basis points to 5.9%; the Central Bank of Mexico announced that it will raise the benchmark interest rate by 0.75 percentage points to 9.25%; the Hungarian Central Bank raised interest rates by 125 basis points, bringing the benchmark interest rate from 11.75%. It was raised to 13%, the highest from the country’s benchmark interest rate since 2000.
Gabriel Pérez del Peral, head of the Department of Economics at the Pan-American University of Mexico, said the United States is a typical unilateralist when it comes to formulating monetary policy without taking into account the interests of other countries. The continued rate hikes by the Federal Reserve will negatively affect the economic development of Latin America and the world.
To curb inflation, the Swedish central bank announced last week that it will raise the benchmark interest rate by 100 basis points to 1.75%. This is the largest increase in the Riksbank benchmark interest rate since 1993. Subsequently, the Bank of Japan decided to keep the accommodative monetary policy unchanged, but the Japanese Ministry of Finance rarely intervened directly in the foreign exchange market to avoid that the yen continued to depreciate. The Swiss National Bank raised interest rates by 75 basis points more than expected on September 22, and the Bank of England raised interest rates by 50 basis points on the same day.
Ian Berg, a professor at the Institute of European Studies at the London School of Economics and Political Science, said that if the UK is to avoid a sharp depreciation of the pound, it must try to keep up with the pace of US interest rate hikes. “Americans do economic policy in response to the situation in the United States and do not take into account the impact on other countries.”
Also last week, the South African central bank raised its policy rate by 75 basis points to 6.25%, while the Indonesian central bank raised its policy rate by 50 basis points to 4.25%.
Dendi Ramdani, an economist at Bank Mandiri in Indonesia, said aggressive rate hikes by the Federal Reserve led to high imported inflation in emerging economies, dragging down economic growth. The move strengthened the dollar but increased uncertainty in global financial markets, holding back investment flows and increasing pressure on emerging market currencies to maintain stability.
The World Bank research report released in mid-September found that global central banks are raising interest rates to a level not seen in the past 50 years, a trend that could continue into the next year, sending the world economy into recession. and by harming emerging markets and developing economies they bring financial crises and cause lasting damage.
In addition, the European Central Bank raised key interest rates twice in July and September of this year, raising interest rates by a total of 125 basis points. European Central Bank President Christine Lagarde said a few days ago that the central bank should raise interest rates further in upcoming meetings to curb demand and prevent inflation from continuing to rise.
Guido Traficante, professor of economics at the European University of Rome, said that aggressive interest rate hikes by the Federal Reserve pushed the dollar to continue rising, which negatively impacted the European economy like the euro. weak, rising inflationary pressures and capital outflows. For some time now, the negative spillover effects of the Fed’s aggressive rate hikes will not be eliminated.
[Direttore responsabile: Yan Yujie]
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