Market reacts positively to FED rate hike in some sectors
FED further rate hike will not cool inflation further but hurt it's economy more. This is because the 2nd largest economy, China is lowering interest rate and pumping cash. In addition, Ukraine - Russian war and OPEC+ lower oil production will push price index up. The best way to cool inflation is to increase global economy cooperation and reduce protectionism - US can't do it alone by killing demand.
You should give up inflation to cool by Q4. But there's good news as not the whole stock market reacts negatively towards FED rate hike. Some analysts predicted that recession if any will be mild or totally avoided. Hence money will go to sectors that increase in demand and promote trade such as medicine, artificial technology, energy storage (battery), supercomputer etc. Investment will also flow to regions that promote stability and economy cooperation such as Asia- Pacific.
Quote:
Prices are stagnating or falling in China despite the fact that the People's Bank of China (PBOC) has been cutting interest rates and pumping cash into the financial system to bolster the economy
Source:
China has an inflation problem. It's way too low | CNN Business
Prices are stagnating or falling in China despite the fact that the People's Bank of China (PBOC) has been cutting interest rates and pumping cash into the financial system to bolster the economy
Source:
China has an inflation problem. It's way too low | CNN Business
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
I reflected trading experiences by writing journals. My comments are for educational purposes not financial advice.
2782Followers
85Following
11KVisitors
Follow
bullrider_21 : The PBOC has dismissed talk of deflation and defended its current policies.
"There is no basis for long-term deflation or inflation," said Zou Lan, an official with the PBOC, at a news conference in Beijing last Thu.
"As the financially supportive policies take effect, consumer demand is expected to warm up and price increases are likely to return to the average levels of previous years in the second half of this year," he said.
bullrider_21 : High inflation was caused by the Fed cutting rates to 0.25% at the start of the pandemic and keeping it too low for too long. This and the trillions of dollars of money printing caused housing prices, stock prices, wages and hence inflation to be very high. If the U.S. cut rates, it will result in inflation rising again and stock prices to be propped up. The solution to lower inflation is to have a recession. China can afford to cut rates to spur demand because its inflation is less than half of the U.S.