What is the purpose of the federal reserve to raise
Beijing time at 3 o 'clock in the morning on the 17th, the federal reserve announced on December 17, from local time start the federal funds rate increased by 0.25%, and maintain at 0.25% to 0.50% range.This is the fed raising interest rates for the first time since June 2006.Does this mean that since 2009 the federal reserve pursues in the zero interest rate under the condition of implementing non-traditional end quantitative easing monetary policy?It to the American economy, the world economy and China's economy to bring what kind of impact?We started in 2016 in the "post-crisis" will be how to deal with the resulting opportunities and challenges?To clear these problems, we should first from the fed's interest-rate increases the signal released about:
First of all, the rate is not our regular calls to tighten monetary policy to control the risk of overheating and choices, but by slightly raising interest rates, even rely on the past many times the federal reserve's policy-setting meeting and communication with the market, to deliver the fed to raise interest rates intentions: avoid like the great depression the fed's exit prematurely, and to stimulate the economy effect vanishes.Therefore, one of the stories of the increases in interest rates is not affect agency bonds held by the fed, the size of the institutions, such as mortgage-backed securities.Even if there are some due debt, the fed
will roll over or the auction, and then will receive money for capital investment institutions.Slightly reduce the unit price is not change the market funds loose situation.
As is known to all, in 2008 after the outbreak of the financial crisis, the fed's monetary policy after a year after exploring pain, decisively give up may result in a "liquidity trap" of the traditional monetary policy tools, and chose to solve the contradictions of the Labour market supply and demand do not match and price "deflation" stress concentration caused by the design of innovative "unconventional" quantitative easing monetary policy - the focus of the policy to solve the problem to a lot of house purchase asset backed securities (MBS), so that the "negative equity" in the family can reply by asset prices to be able to effectively handle.Because the debt of labor in the United States is unable to take the stain of credit to a new place to rent a house (settle) for the enterprise to create new work opportunities.Otherwise, unemployment and the coexistence of "labor shortage" problem will haunt the health of the U.S. economic recovery.On the other hand, in order to improve the enterprise's financing ability, large purchases of government has the attributes of the collateral assets, such as bonds and mortgage securities, to repair damaged by the financial crisis of the mortgage demand which the enterprise financing ability.Otherwise, the lack of business investment, employment pressure is big, and rising unemployment, and
affects the spending power of American society as a whole and support the growth of the service sector of the U.S. economy pattern.As a result, the heart of the amount of the fed's unconventional wide policy itself is not "rate" level, but in improving the business environment needs to be fixed by commodity prices and improve the ability of market investment and financing of the financial environment (ability to improve enterprise's mortgage).In a word, good control of term structure of interest rates (monetary policy and the relationship between market investment and financing ability) than finding the right level of interest rates (monetary policy and the relationship between the financing cost) is more important.
Second, the rate is not means that the U.S. economy outshine others began to enter the stable rise, but fully released today that fed monetary policy goals are considered in the performance of the world economy and the global financial market reaction to America's economic problems on the signal.The fed's benchmark interest rate adjustment is reluctant to increase the new concerns.Raised the FED rates and even today, the FED is repeated many times in the future will maintain a "prudent and gradual manner" action (expected to raise interest rates next year there will be four times, each time limited to 0.25 basis points; even so, does not rule out future according to the internal and external conditions of monetary easing may again), a large reason is the weak American net
exports and the international energy prices generated by the downturn in the "import deflation" effect.Today in the United States and industrialization, the $or solve the huge fiscal deficits, will depend on the recovery of the world economy degree and the increase of the global financial market diversification opportunities.Or QE exit way improperly, can cause the dollar bubble, emerging market economies of a serious recession, weak commodity prices is more serious.This situation makes the U.S. balance of payments imbalances will become more serious - it will even affect the dollar debt sustainability and the dollar in international monetary system has kept to the absolute influence today. Third, rates this time is not easy to understand the fed opened the channel, but check it after multiple oral interpretation on the basis of the public are carefully designed in the first round of QE exit policy efforts, reasonable space is appropriate (is actually in a QE exit pressure test)?Is raising interest rates, such as a market panic selling of the sequela can be controlled to the point of minimum?Obviously, the global stock market rally after raising interest rates, reflecting the market of "tolerance" of the federal reserve and the U.S. economic recovery will not be monetary policy recognition of excessive interference;While the dollar fell, reflects the international capital has accepted the fed induction of the weak dollar (for the net export growth and alleviate the pressure of the deflation import and maintain loose monetary attitude);In addition, the
U.S. Treasury prices fell, the reaction is market risk aversion was freed after raising interest rates.It was good in these markets reflect the fed and the markets of communication are well test today, it is also can draw lessons from a classic case of central Banks in the future. For China, we are ready to two aspects: one is the price of fed fine-tuning may be in today's China's economic downward pressure is still large, China's financial market volatility pattern continues, and gradually increase the financial opening and financial regulatory environment, capital flight and currency substitution, exchange rate depreciation and its degree of self-reinforcing phenomenon (herd behaviour), it can form China's macroeconomic regulation and control and financial regulation in the short term a lot of pressure.Second, the foreign exchange to reduce the features of the money supply shrink, challenges our current monetary policy orientation.For the former, we should be taken to speed up to release the pressure of currency controls and asymmetric capital management, strengthen the measures (for example, let go of the inflow of domestic financial market but at the same time, strengthen the supervision of the capital outflow, and given the appropriate tobin tax outflow channels such as the balance of payments of reverse open measures against the power of the opportunist outflow), to deal with the behavior of the rapid devaluation of the RMB exchange rate at present.The benefits of it is to rely on
market forces to fill the risk-free arbitrage space, reduce the central bank and the market to do "rival dish" risk and cost.In addition, the key point of left the national savings in the mainland, is whether we will be able to effectively promote the reform process of the financial service for the real economy, for example, property rights protection, system perfect, relax market access conditions, encourage financial innovation brought to the business (the construction of multi-level capital market), strengthen the principle of fair competition evolution, etc., to solve the current financial institutions to balance the profit ability is low.Which brings a kind of "balance" : today depreciation will produce tomorrow export increase and the long-term capital inflows of than up;It will allow the yuan to gradually stable in the future.RMB internationalization strategy of negative factors will also get effective control. Special emphasis is needed here is that today's QE exit way do accompanying China's capital outflow phenomenon, foreign exchange to reduce the problem to us, but it must not be simple to think that the central bank can through the relaxation of the domestic monetary policy to "hedge".Want to know, today is less foreign exchange with the entity economy, consumption and investment are falling foreign demand, formed in the process of solving foreign exchange caused by shrinking the money supply is the key to the entity economy end through the supply of innovation and the effective demand to produce healthy
demand for money, otherwise, the only currency levels to adjust to the boom of "normal" level, so, the real economy "money shortage" problem (mostly zombie companies caused by the bad assets), while the "money" by the department of virtual economy imbalance pattern (chase after go up kill drop is public financial speculation phenomenon of) becomes more and more serious:
On the one hand, because companies are lack of profitability (ecological difference between enterprises of China and the United States, our ability to innovate and the lack of core competitiveness, unable to produce the result that the fed quantity wide policy that) but if still want to go to loose monetary and credit expansion to stimulate the economy, so, this behavior will inevitably lead to consumers' inflation expectations have increased, the resulting against the future purchasing power of money decreased and the pursuit of the high yield of speculation will be increasingly common.This round of the quantitative easing monetary policy alternative to emerging market caused the biggest hangover, is brought in foreign exchange for the export-oriented economy countries drastic fluctuations.Generally speaking, in the developed countries, in the face of the excessive increase of currency, people tend to consumption in order to advance the way to overcome the future of the decline of the purchasing power of (may be part of the fed's policy effect is from this positive effect).In emerging markets like China, the public is
not yet complete the primitive accumulation of wealth (what we today in the world per capita income of 70 or so), our industry ecology (capacity) and the financial ecology negative interest rates (bank), however, is more advantageous to the consumer to take off the media (to property speculation to fry their deposits) or the use of financial leverage (borrow someone else's money to bo luck), to invest in "scarce" resources, such as real estate, financial products, etc.), using the content with rare for expensive price rising characteristics, to achieve low prices in high out of "highly profitable" mode, thus against the risk of the future purchasing power of currency issuance fell (this is accompanied by the fed to cut interest rates and easing monetary policy and increase our foreign exchange, the most likely to happen is a financial bubble risk rather than inflation risks brought about by the excessive consumption and investment).
On the other hand, due to the large amounts of capital flow into the financial market is not a commodity market, makes the problem of insufficient consumption is still outstanding, the enterprise sales prices, prevalence and declining inflation, lead to corporate profitability declining ecological deterioration (industry).In this case, the bank can only be made by selling products to disintermediation money back on to the banking system, making it brought to the business (potential) rising cost of capital, capital demand of the small and medium-sized enterprise
loan interest rates continue to increase, continuously shortening time limit (financial ecological deterioration).Even if the government has urged Banks to provide financing services to small and medium-sized enterprises, but also because of the profitability of small and medium-sized enterprises limited and have to prompt banking lending interest rates increased the risk premium.(this is our country foreign exchange regardless of increase and decrease, small and medium-sized enterprise financing costs are the cause of the drop down).So today, in the face of the impact of the fed's monetary policy adjustment, the Chinese government should improve "in the currency market steady, release pressure," the foreign exchange market tool innovation level and its intentions and mass communication ability, so as to better solve the exit for Chinese enterprises to form the negative impact of QE. In short, China's financial ecological economy (direct financial services in the real economy ability) and industrial ecology (commercial profits growing environment) is still in relatively backward state, the federal reserve's QE exit pressure as a result of shrinking foreign exchange to us, can't easily to hedge with loose monetary policy, on the contrary, the Chinese government should take relax capital inflows and currency swings controls, increased speculative capital shorting China market uncertainty and transaction costs, at the same time to improve the ecological environment of financial services entity economy, speed up
the introduction of high-end talent (which includes not only the core financial institutions should also include the government regulators), unswervingly build multi-level capital market, value toward financial business innovation, and strengthen the fair competition in the evolution of legislation and law enforcement system, only in this way, to solve the current financial institutions "asset" problem "is to thwart China's monetary policy effectiveness play at the root of the problem, can ensure that China's monetary policy is not affected by the great powers of the United States, monetary policy adjustment, so as to realize its proper price stability, in favor of the ultimate goal of China's economic development.Otherwise, the easy money lead to financial speculation and asset bubbles problem will become more and more complex, more and more serious.