The United States is expected to continue to raise interest rates, the RMB, Hong Kong and foreign exchange remain weak, and the Hang Seng Index rebounds by 50%
After the US Federal Reserve Board held an interest rate meeting in May, as expected, it announced an interest rate increase of 0.5% and raised the federal funds index interest rate range to 0.75% to 1%, the largest single interest rate increase since 2000. At the same time, the Federal Reserve announced the specific details of the reduction of the balance sheet of nearly US $9 trillion. The authorities will reduce the balance sheet by US $47.5 billion each month from June 1, including US $30 billion of US Treasury bonds and US $17.5 billion of mortgage-backed securities (MBS). After three months, the monthly reduction scale will double to the upper limit of 95 billion yuan. When the reserve level is slightly higher than the ample reserve level considered by the Federal Reserve, The authorities will start to slow down or even stop the contraction.
According to the CME fund interest rate futures tool, at that time, the market generally expected the Federal Reserve to raise interest rates by 0.75% in June and July respectively, but the Federal Reserve did not further hawk after this interest rate discussion. Chairman Jerome Powell attended a press conference after the interest rate discussion and said that the Federal Open Market Committee (FOMC) believed that raising interest rates by 0.5% in each of the next two monetary policy meetings was a possible option, but ruled out the possibility of raising interest rates by 0.75% in a single meeting, This means that the expected range of interest rate increase has narrowed.
John Williams, President of the New York Fed, and Loretta mester, President of the Cleveland fed, said last week that they supported the Fed’s June and July meetings to raise interest rates by 0.5 per cent respectively, but mester said that if inflation did not fall in the second half of the year, it could not be ruled out that a single interest rate increase of 0.75 per cent might be required later. Williams mentioned that the Fed’s interest rate hike to curb inflation will lead to a slight rise in the unemployment rate, but it will not deteriorate significantly. Powell believes that the US economy has conditions for a soft landing and avoids recession in the process of controlling inflation. Janet Yellen, the Treasury Secretary, agreed that as long as the Federal Reserve skillfully raises interest rates, the economy is still expected to grow steadily for several years.
