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What is the Fed rate hike

by admin

When the governing council meets in Washington and decides to change policy and raise the federal funds rate.

In short, raising interest rates is a tightening of monetary policy by which the Fed will respond to the current economy.

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Higher interest rates mean higher financing costs for companies, which has a dampening effect on consumption.

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So at least the underlying indicators such as employment and consumption are improving or doing well before raising rates.

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Raising interest rates is a policy tool to prevent overheating and cool the economy.

Generally speaking, a rate hike can increase the bank’s interest rate, thus reducing, the dollar will appreciate.

In addition, a stronger dollar through higher interest rates will have an impact on the economy.

For example, when the dollar rises, the price of gold falls and everyone prefers to hold dollars.

Other countries’ currencies will depreciate and so on.

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