1. The definition of interest rate hike is that the central bank of a country or region raises the borrowing cost of commercial banks from the central bank, and then forces the market to raise the interest rate.
2. Purpose The purpose of interest rate increase includes reducing and restraining consumption, curbing inflation, encouraging deposits and slowing down market speculation, etc.
Higher interest rates can also be used as an indirect means to raise the value of a country or region against other currencies.
1) Interest rate increase,.
In other words, after the Fed raises rates, it will become more valuable, which is no doubt good for investors holding the dollar and.
However, it will come under pressure to depreciate further.
For those who want to study in the United States, travel to the United States during Chinese New Year, or shop overseas, this means you have to pay more.
2) Dollar-denominated precious metals, such as gold and silver, will be more expensive after a dollar rate hike.
Once something is expensive, fewer people will buy it.
As a result, future investments will be less attractive and prices will fall.
In fact, this is for the same reason that supply and demand affect commodity prices.
3) China’s domestic capital flows to the US after the dollar increases interest rates.
There is less money in China and less money to invest in equities.
Without money, there was no upward momentum, and the stock market began to plummet.
Business investment is down, slowing down, and household consumption is down 4.Enterprises that are heavily affected by the interest rate hike 1) Enterprises that require continuous capital expenditures, such as equipment depletion and plant construction in heavy asset enterprises.
2) Capital-intensive enterprises, such as real estate, need land acquisition funds and building.
When interest rates go up, money becomes more expensive, which has a big impact on the turnover of a business.
1) For enterprises with brands, once the brand is established, even if the capital investment and maintenance of the brand are reduced, it will have little impact on the business in the short term. However, businesses in this mode are completely insensitive and indifferent to whether the interest rate is increased or not.
2) Digital economy enterprises, once network effects are established, will have huge user stickiness and will not need to spend a lot of money every year to maintain this network.
It still makes money, and the rise and fall of interest rates have no effect on the nature of the business.
