What is the meaning of further fed rate rises?
The federal reserveAnnounced that starting from the local time on December 17, the federal funds rate increased by 0.25%, and maintain at 0.25% to 0.50% range.This is the first time the federal reserve since June 2006Increases in interest rates.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 has onThe United StatesEconomy, how to influence the world economy and China's economy?We started in 2016 in the "post-crisis" will be how to deal with the resulting opportunities and challenges?To say these problems, we should first of all from the federal reserve released the hike this signal.
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, to stimulate the economy effect vanishes.So, this is one of the stories of interest rates will not affect the agency bonds held by the fed, the size of the institutions, such as mortgage-backed securities.Even though some national debt maturity, the fed will roll over or auction, it will 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, but chose to focus on the design of innovative "unconventional" quantitative easing monetary policy, the purpose is to solve the contradictions of the Labour market supply and demand do not match and the damage of "deflation" pressure on prices, the focus of policy implementation in a large number of house purchase asset-backed securities (MBS).
On the one hand, this make "negative equity" family problems can be through asset prices reply to be able to effectively handle.In the United States, the debt of the labor force is unable to take their credit stain to a new place to rent a house (settle), also it will be difficult to get companies to create opportunities for new labor.Therefore, if the family trapped in "negative equity", jobs and labor shortage problem will be 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, lack of business investment, employment pressure is big, and rising unemployment, and will affect the consumption ability of American society as a whole, affect the growth of support services in the United States.
Therefore, the federal reserve quantity wide policy core is not "rate" level itself, but to fix the price of commodities, improve the market investment and financing ability.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 does not mean the U.S. economy stands alone to begin to enter the stable rise, but fully release the world economy and the global financial market reaction on the U.S. economy -- the fed the present monetary policy needs to be addressed.Before, the fed was too slow to adjust the benchmark interest rate, in the future, the fed will remain "cautious and gradual way" (expected to raise interest rates next year there will be four times, each time limited to 0.25 basis points. Even so, also don't rule out the possibility of future relax again according to the situation).The federal reserve to do this, a lot of the reason is that the weak us net exports and the international energy prices are low "import deflation" effect.American industrialization, and solve the hugeThe dollarThe fiscal deficit, depending on the degree of the recovery of the world economy and the increase of the global financial market diversification opportunities.If QE exit is undeserved, can cause the dollar bubble,Emerging marketsCountry a deep
recession,commoditiesPrices are weak.This kind of situation will make the balance of payments imbalance problems become more serious, which affect the dollar debt sustainability, even affects the absolute power of the dollar in the international monetary system.
Third, the rate can not be simply interpreted as the federal reserve to open the channels to raise interest rates, but in many oral paper (is actually in a QE exit pressure test), on the basis of the rate of sequelae such as market panic selling was controlled to the point of minimum.The subsequent global equity markets, reflect the market of the fed's "inclusive mentality", and they believe that the U.S. economic recovery by the interference of monetary policy will be small.The dollar index fell, reflects the international capital has accepted the fed induction of the weak dollar (the fed could net export growth, ease import to maintain loose monetary deflation pressure);Treasury prices fell, reflect the market risk aversion to release.The market performance, reflecting the fed and the markets of communication ability is very strong, this is the central Banks can draw lessons from a classic case in the future.