To The Moon

On Wednesday, June 15th (Eastern Daylight Time), the Federal Reserve announced after the meeting that it plans to raise its target range of Federal Funds rate from 0.75% ~1.00% to 1.5% ~1.75%. It is the first time the Fed has raised interest rates by 75 basis points in 27 years. Before the meeting, it was widely predicted that the rate hike would be 75 basis points this time. After this, the Fed will have 4 meetings on interest rates in July, September, November, and December. The market expects that by the end of this year, the Fed will raise interest rates to between 3.0%-3.5%. Reasons Behind Since the beginning of this year, inflation in the United States has been soaring: There is no doubt that the rising interest rates will bring about depression in the global economy. But the essential reason for this inflation is the massive round of quantitative easing that began in 2020 in Western economies led by the United States. Oil prices, food prices, epidemics, and wars are all catalysts, not essential causes. The Impact Considering the current situation, if the interest rate rises to 3.5%, it will have a certain impact on the US economy. It will be a large range if the interest rate increases from 0.25% to 3.5%, especially in one year. If interest rates continue to rise, it will significantly inhibit the economy, especially investment. U.S. companies will face higher financing costs and fewer profits, which will further prompt to reduce investment and form a vicious circle.