How US interest rates affect the global economy

Estimated dollar

After the Federal Reserve they remained for the next six years, to near-zero, slashing tariffs. Economic recovery stimulus implemented a year of quantitative easing. The goal was to boost investment along with consumer. Spending and pull the American economy out of recession. In the following years, the economy. Began to recover, and as a result, the Federal Reserve laos whatsapp number data announced that it would. Raise interest rates once again. Historically, rising interest rates have been accompanied by an appreciation of the US dollar. This, in turn, affects economic aspects at home and around the world, including credit markets, commodities, stocks and investment opportunities.

Treasury obligations

The value of US Treasuries is directly related to changes in US interest rates, and US Treasury yields quickly reflect changes in domestic interest rates. As the yield curve moves up or down, world rates are set accordingly. Since Treasuries are considered a risk-free asset any other security must offer higher yields to remain attractive, and interest rates are expected to rise, causing global investors to put their money in the US.

Emerging markets feel a lot of pressure to remain attractive. Ultimately, this could hamper employment levels, exchange rates and exports in developing countries.

Debt denominated in dollars

With the US economy showing signs of growth, raising interest rates may be the right move for America as QE ends. In addition, emerging markets will suffer. Dollar denominated debt outside the United States is $ 3.3 trillion, there are emerging markets, $ 9 trillion. Countries that run persistent trade deficits, such as Turkey, Brazil and South Africa, finance their current account deficits by increasing dollar-denominated debt. When the dollar appreciates, the exchange rate between developing countries and the US tends to increase in situations where US interest rates rise. As a result, the dollar debt of developing countries increases and becomes unmanageable.

Credit market

Fear of rising interest rates will have their roots in the effect of contractionary credit and money supply. According to Econ 101, higher interest rates cause the money supply to decrease and the dollar to appreciate. In addition, contracts ad account setup and rc optimization on lending and credit markets. Global credit markets track the movement of Treasury bonds. As the interest rate increases, Due to the industrial decline in the cost of products so does the cost of the loan. Borrowing, from bank loans to mortgages, will become more expensive. Hence, the increase in the cost of capital may hamper consumption, processing and production.

Commodity market

Oil, gold, cotton and other global commodities are priced in US dollars, and after a rate hike, a stronger currency raises commodity prices for non-dollar holders. In the first place, the situation of economies based on commodity production and abundance of natural resources will deteriorate. , their available credit flows are reduced.
Interest rates are key indicators of economic deb directory growth. In the US, the move to raise interest rates by the Federal Reserve System is expected to boost investor sentiment and boost  by excess production and cheap debt.) While the Fed’s primary concern is the US economy, it also focuses on the impact of rate hikes on foreign trade. in global credit and commodity markets.