How the world economy will be linked

By Phillip Ramirez,2015-07-16 15:49
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How the world economy will be linked

    How the world economy will be linked?

    At the end of 2015, a head hanging in the past two years in the world economy "boots" finally fall to the ground, the fed said.This means that after the seven years since the 2008 financial crisis after the age of near-zero interest rates, the fed has reopened the new tightening cycle.As the global financial system is still the dominant currency, the dollar is extremely important for the global market, the fed's decision to raise interest rates or not more direct relation with the future of the world economy.

    For the first time in nearly 10 years

    "The central bank took a landmark step."For the fed to raise interest rates before decision, the British financial times said.

    Beijing time on December 17, in 2015, the federal reserve announced that a policy-setting meeting the federal funds rate by 0.25%, to 0.25% - 0.25% of the target range, this is the federal reserve to raise interest rates for the first time in nearly 10 years.

    In June 2013, the former chairman of the federal reserve Ben bernanke announced his retirement from schedule of quantitative easing, the fed to raise interest rates to become a hanging over the global financial market is not "boot".In 2015, rates about whether and when the message is, The Times of the world's financial market fluctuations.

    Finally, the "boot" fell to the ground.

    "This time the market's expectations of the fed to raise interest rates more consistent, including inside the fed is no controversy, rare all passed the interest rate."China international institute researcher at the institute of world economy and the development of Wei Min in an interview with our reporter believe that compared to the previous speculation in June and September the two nodes may raise rates this year time, the time more mature at this time.

    On December 4, the U.S. department of labor, according to the data published on November non-farm payrolls growth 211000 people in the United States, more than expected, the unemployment rate is 5.0%, with flat last month, considerable data in open to raise interest rates before the end of the channel for the federal reserve.

    "It is evident that economic recovery has made great progress."In 17 daily decision announced at a news conference after the meeting, the fed chairman yellen said, expected to continue the good economic performance, so the fed thinks small increase in the federal funds rate is appropriate.

    Part has been digested

    As German news television said, "one small step" of the federal reserve, is "an important step forward" for global.After more than two years of speculation that the federal reserve to raise interest rates the door finally opened, in fragile recovery of the world economy can cope?How will the world economic landscape and linkage?

    "For the time and amplitude of the federal reserve to raise interest rates, the global market after has expected, and in this direction is prepared."Wei Min pointed out, which makes the major global financial markets and economies of the discounted rates could bring some negative effects, does not have obvious panic.

    , of the China institute of contemporary international relations in the world economy research institute feng-ying Chen argues that for the world economy, the federal reserve to raise interest rates to some extent is a good news."On the one hand, finally over market uncertainty about interest rates or not, on the other hand shows that the U.S. economy is in a positive development, it is a positive sign for the world economy."

    Now, full of expectations and increase by 25 basis points, making the rise to bring global impact is likely to be modest.17, released in the federal reserve to raise interest rates after the news, global stocks generally rose, the three major stock indexes rose by more than 1%, the asia-pacific stock markets are closed up, European stock markets also boost mood.

    To Reuters, the market is relatively calm initial reaction, partly thanks to the fed in advance when it is clear that the rate increases, saying it was gradual and tightening policy.

    However, analysts say, though ready, but increases the negative impact is difficult to avoid completely.Especially for emerging economies, in the face of raising interest rates after the devaluation, capital outflows, heavy debt burden, commodity prices, such as multiple pressure, it is not easy to want to calm.

    "According to the calculation of the institute of international finance, since this year, emerging markets to reduce significantly the net inflow of capital, the fed will raise interest rates further volatility in emerging markets, and make its monetary policy in a dilemma."Bing-xi zhen, a researcher at the Chinese international studies said in an interview analysis.

    In addition, the European central bank, the bank of Japan, and other peers remain quantity under the background of wide, the federal reserve to raise interest rates strides resolutely, means the differentiation of the global monetary policy will be more obvious, the complexity of the global market will face more severe.

    "If there are some new financial turmoil, between several big central bank monetary policy is difficult as before coordinated, for the prevention, avoid the world economy in the future may face the risk of an adverse."Bing-xi zhen said.

    Wei Min also pointed out that the fed raising interest rates, global currency markets, the stock market uncertainty remains, the need for a longer-term adjustment process, the dollar-denominated international oil prices after the fall recently, also will continue to face downward pressure

    Interest rates not smooth path

    In fact, for the slow recovery of world economy, recurring rate increase is not terrible, more uncertainty in the fed's interest rate hikes in the path of future one year or longer.

    The financial times, according to the survey about the frequency and amplitude of the fed to raise interest rates next year, according to the study of the economists, 24% predicted twice, each time by 25 basis points, to 39% forecast interest rates three times, 30% predicted increases in interest rates four times.The paper also points out that yellen recently are actively send a message to the market, namely the fed to raise interest rates, only slowly to evaluate every slightly higher interest rates impact on economic and financial conditions.

    At present, the fed will adopt a gradual path, moderate increases in interest rates has become a basic consensus.However, analysts say, rate plan can smooth implementation is still uncertain, it is the fragile world economy a risk not to be sneezed at.

    "Now the state of the us economy has not completely meet the condition of the federal reserve to raise interest rates, while the unemployment rate fell to 5%, but inflation always have fallen below the 2% target."Wei Min believes that with the stronger dollar after raising interest rates, oil prices continue to fall, overbuilt, based on the United States in 2016 to achieve target rate of inflation is not easy, the road to the federal reserve to raise interest rates may not help as expected so smoothly."If the situation is bad, the fed's rate cut may back."

    The Wall Street journal also believes that the current global economic development and a variety of potential crisis may, after the fed into the cycle again cut interest rates to zero is possible.To 65 before the world survey of economists, more than half of the scholars have similar concerns.

    Even yellen, in the expression to raise interest rates and reserve leeway to oneself.She said that even after raising interest rates, the fed's policy stance remain loose, if the economy is disappointing, will be more easy.

    "Repeated may exist. The U.S. economy is not particularly healthy, so the global or to watch the federal reserve because of the economic situation changes, suddenly decided to cut interest rates or repeated phenomenon such as improve the rate rise, alert to the instability of the policy."'said Chen fengying.

    Research suggests that the federal reserve to raise interest rates, and real is still the continuation of its economic strategy since the financial crisis has always been, is under the condition of improvement in the domestic economy, employment recovery of international

capital, through the "blood" economic recovery, to further consolidate itself to the whole

world rather than simply releasing bonus.It also requires the world economy in the face of this

round of rate of moderate shocks, remain alert.

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