The Effect of Federal Reserves Rate Hikes: A perspective of Financial Market

Abstract

In recent years, due to the global economic recession caused by the Covid-19 pandemic, the Federal Reserve has increased the interest rate to a historical high level in recent years. In this article, the author plots the diagram of index vs. Time to show the overall economic situation. This article concentrates on the effect of the rate hikes of Federal Reserve. The purpose is guiding the investors and governments to make decision under the challenging situation. Based on the timeline of rate hikes, there are improvement of the overall economy in US. It is a chance for investors to invest the money. There are chances for investors to invest when the US Federal Reserve increase the interest rate. The investors will have more confidence to increase income if the overall economic condition is improved by the rate hike. The government can control the level of the investors confidences to keep stable development of economy by controlling time of rate hikes.