How will interest rate hike by the Fed impact us ?
Yesterday, Asia woke up to US Federal Reserve 0.75% rate hike, the largest since 1994.
The Fed is trying to battle the highest inflation in four decades or so.
Whereas the rest of the world, particularly Asian economies, will have to deal with inflation AND react to Fed’s rate hike.
With the rate hike, money in the rest of the world will gravitate to US. To stem the slide of their own currencies against the US dollars, central banks will have to raise their respective interest rates.
The monetary easing era since the Global Financial Crisis in 2008 has officially ended.
The Malaysian economy will need to take a hard look at every aspect of what was taken for granted for the past decade or so. The consequences are huge.
The squeeze on ordinary Malaysians from the triple whammy of inflation, a sliding ringgit, and higher interest rate, is scary, to say the least. Policy makers must do better in the crisis.