Risk to World Economy: Drastic US Interest Rate Hikes

Published in Yomiuri Shimbun
(Japan) on 6 May 2022
by (link to originallink to original)
Translated from by Dani Long. Edited by Gillian Palmer.
Although it is important to curb inflation by raising interest rates, the shrinking U.S. stock market means trouble. The U.S. Federal Reserve Board, which maintains domestic and foreign economies, needs to take control of fiscal policy.

On May 4, the Fed raised interest rates by 0.5% for the first time in 22 years after it lifted the de facto zero interest rate policy in March. The interest rate has increased to between 0.75 to 1% for the first time since 2000.

The Fed has continued its policy of quantitative easing that allows large amounts of money to flow into the market via national debt and spending, but the Fed has indicated that it will enact a policy to reduce assets in the future. This will decrease the amount of capital available in the market and result in a credit squeeze.

In March, the U.S. Consumer Price Index saw its highest growth rate in about 40 years. We can understand why the Fed is in a hurry to tighten monetary policy to curb inflation.

Fed Chair Jerome Powell told a press conference that “it’s absolutely essential to restore price stability,” and added that the Federal Reserve plans to continue raising rates.

The problem, however, is that a sudden credit squeeze could invite an economic downturn. Risks to the world economy are on the rise and the Fed needs to carefully scrutinize the impact of its decisions.

Russia’s invasion of Ukraine spurred a sudden jump in prices for resources and foodstuffs. This is a major blow to developing countries with low income levels. Rising U.S. interest rates could spark an outpouring of funds from emerging markets and developing countries, as investors look for bigger returns.

China is upholding a “zero-COVID policy” and Shanghai is under a city-wide lockdown. Stagnant production and consumption in China, which is said to be the "factory of the world" and has a vast market, are expected to seriously impact the world in the future.

In the U.S., the value of stock for industries like information technology, where there were high hopes of increasing prices, has recently plummeted. Powell indicated there will be further rate hikes after the 0.5% increase, but it is not yet clear when this will happen or what another increase would look like.

The Fed should pay close attention to the condition of the world economy and financial markets and adjust the pace of rate hikes carefully.

For Japan, it is worrisome that the U.S. interest rate hike could bring about further depreciation of the yen.

Last month, the Bank of Japan decided to continue quantitative easing in an effort to push long-term interest rates to around 0%. If the interest rate differential with the U.S. widens, it will be more profitable to manage funds there, resulting in the strengthening of the dollar while the yen depreciates.

Sudden market fluctuations have an immense impact on the economy, making it difficult for companies to make business plans. The government and the Bank of Japan must continue to monitor market trends.


利上げでインフレ抑止を図るのは重要だとしても、米景気を冷やすようでは困る。米連邦準備制度理事会(FRB)は国内外の経済に目を配り、金融政策を 舵かじ 取りしてほしい。

FRBは4日、3月に行った事実上のゼロ金利政策の解除に続き政策金利を0・5%引き上げた。22年ぶりの大幅利上げで、政策金利は0・75~1%となった。

FRBは、国債購入などにより、大量のお金を市場に流す量的緩和を続けてきたが、今後、資産縮小に乗り出す方針も示した。市場に出回る資金を減らし、金融引き締めの効果をもたらすものだ。

3月の米消費者物価指数は、約40年ぶりの高い伸び率となっている。インフレ抑制のために金融引き締めを急ぐのは理解できる。

 FRBのパウエル議長は記者会見で、「インフレを低下させることが不可欠だ」と述べ、利上げを継続する意向を表明した。

 一方で、急激な金融引き締めは景気悪化を招きかねないジレンマを抱える。世界で経済のリスク要因は増えており、FRBは影響を入念に点検する必要がある。

 ロシアのウクライナ侵略で、資源や食料の価格高騰に拍車がかかっている。所得水準の低い途上国への打撃が大きい。米国の利上げは、高い利回りを求めて新興国や途上国に投じられてきた資金の流出につながる恐れもある。

「ゼロコロナ政策」を掲げる中国では、上海などが都市封鎖を行っている。「世界の工場」と言われ、巨大市場も抱える中国の生産や消費の停滞は今後、世界に深刻な影響を及ぼすとみられる。

米国では最近、値上がり期待が大きかったIT企業などの株価が下落していた。パウエル議長が記者会見で、今後の利上げ幅が1回で0・5%を上回ることに否定的な考えを示すと、4日は値を上げたが、先行きは不透明だ。

FRBは、世界経済や金融市場の状況を精査し、慎重に利上げのペースを調整してもらいたい。

日本にとっては、米国の利上げが一段の円安をもたらす可能性があることが不安材料だ。

日本銀行は先月、長期金利を0%程度に誘導する金融緩和の継続を決めている。米国との金利差がさらに広がれば、米国での資金運用の方が有利になり、ドル高・円安が進みやすい。

 急激な相場の変動は、企業の事業計画を立てにくくするなど経済へのマイナス面も大きい。政府・日銀は引き続き、市場の動向を注視せねばならない。
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