The Impact of Interest Rate Hikes on the Capital Markets

As the COVID-19 pandemic continues to spread globally, the economic situation of countries has captured significant attention. The resulting inflation has prompted countries to implement monetary policies to stabilize economic activity. As the leading economic power in the world, the United States has a significant influence on the global economy. This study aims to analyze the interest rate hike policy implemented by the United States, its plan and purpose, and its social impacts. Comparative analysis is used to examine the interest rate policies of China and the European Union, two significant trade partners with which the United States has a positive commercial relationship. Also, this paper further analyzes the domestic effects of the trading partners of the interest rate policy. It is found that both the US and the EU have also implemented the policy of interest rate hikes, whereas China has implemented the policy of interest rate cut. The different policy decisions are related to the extent of economic recovery after the pandemic, the political context, and the cultural background of each country.