After the dollar becomes "more expensive", it will have an immeasurable impact on the people of the world.

　　On July 27, local time, the U.S. Federal Reserve raised its benchmark interest rate by another 0.75 percentage point.

This is the fourth time the Fed has raised interest rates this year and the second time in a row since June by 75 basis points. The cumulative rate hike is 225 basis points, raising the target range of the federal funds rate from 0 to 0.25% to 2.25 to 25 basis points. 2.5%.

　　Whether in terms of degree or speed, this can be called the largest rate hike in the United States since the 1980s, and it will certainly have a huge and far-reaching impact on the United States and the world.

　　As a common topic this year, the direct reason for the Federal Reserve to raise interest rates frantically again is, of course, the high inflation in the United States.

　　For ordinary Americans, if inflation can be effectively contained, then of course it is a good thing, especially if the demand for employment can remain strong.

This means that the U.S. dollar in the hands of the people is more "valued", which can relieve the pressure of life to a certain extent.

　　The high-fever inflation will not only bring to naught President Biden's idea of ​​"rebuilding a better future", but also directly deteriorate the prospects of the Democratic camp in this year's midterm elections.

Therefore, the "hawkish" approach of the Federal Reserve actually assists the Democratic Party's election.

　　However, the accelerated rate hike is also casting the shadow of an economic crisis in the United States.

　　The immediate cause of the subprime mortgage crisis in 2007 was that the bubble created by long-term low interest rates was punctured by sudden interest rate hikes.

During the Trump administration, the Fed has been adopting quantitative easing.

In 2020, when the new crown pneumonia epidemic broke out, the U.S. government even launched a sky-scale "relief fund".

However, when the dollar tide ebbs because of interest rate hikes, many assets that have been upgraded, whether they are physical assets or financial assets, will most likely be re-priced.

Whether the U.S. economy can land smoothly and softly is still a serious event that deserves great attention and consideration.

　　In addition, the Fed's interest rate hike will inevitably have a worldwide impact, and the direct result is that the dollar is more "expensive".

　　For most non-dollar countries, there will be a dilemma.

If these countries choose not to raise interest rates, it is likely that the interest rate gap with the US dollar will become smaller or even inverted, which will greatly increase the risk of capital outflows and make international payments in trouble.

　　Of course, these countries can also choose to raise interest rates, but not all countries have the conditions for raising interest rates.

　　At present, there are two main types of interest rate hikes that choose to follow the United States: countries and economies with relatively low interest rates and relatively good economies such as Canada, South Korea, and the European Union, and countries and economies such as Turkey and Argentina whose inflation rate has reached the skyline .

　　Of course, there will be voices saying: Why must US dollars be used?

Non-dollar currencies can just usher in new opportunities for power expansion.

This seems possible in theory, but the reality is that sellers need to be persuaded to accept payments in non-USD currencies first.

　　In a nutshell, facing the impact of the current US dollar interest rate hike, there is only one way out: do a good job of your own economy and make your currency more stable and reliable.

　　Liang Yabin (Professor, Institute of International Strategy, Central Party School)