From Monetary Policy to Global Growth: The Long and Short Term Impact of US Interest Rate Hikes on the Global (Asia-Pacific) Economy
Year: 2024
Type: article
Abstract: US interest rate hikes, primarily determined by the Federal Reserve, exert significant influence on global economic conditions. Recent developments, particularly in Japan, have highlighted the profound impacts of these policy shifts on global markets, with the Asia-Pacific region being especially affected. This paper examines both the short-term and long-term consequences of US interest rate hikes on Asia-Pacific economies. In the short term, these hikes have led to currency devaluation, capital outflows, and stock market volatility. Over the long term, they have influenced growth forecasts, investment patterns, and trade dynamics within the region. The paper begins by introducing US monetary policy and its global ramifications, followed by an in-depth case study of recent rate hikes and their effects on select Asia-Pacific economies. It then provides a thorough analysis of the economic impacts and offers policy recommendations to mitigate the negative consequences. The goal of this paper is to deepen the understanding of global economic interdependencies and to propose measures for Asia-Pacific economies to adapt and respond effectively to changes in US monetary policy.
Author: Boxuan Zhang
Institution: University of Southampton
Language: English
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4405818581