The United States Stock Market Trend Based on Interest Rate Decisions Under Covid-19
- DOI
- 10.2991/aebmr.k.220405.025How to use a DOI?
- Keywords
- Interest rate; Stock market; Covid-19; inflation rate
- Abstract
Interest rate policy is the core policy of the Federal Reserve for macroeconomic adjustment. The Federal Reserve’s adjustment of interest rates often fully reflects the stock market as an economic barometer. Through the interest rate transmission mechanism, stock prices have risen rapidly during the epidemic. But it also led to high inflation and a stock market bubble that kept popping. Therefore, this paper will focus on the changes in the US stock market during the epidemic. Starting with the interest rate policy of the Federal Reserve, it will explore how the four interest rate transmission mechanisms of the Fed’s interest rate cut progressively affect the stock market, thus promoting the continuous rise of stock prices. Besides, it will discuss inflation and the stock market bubble caused by low interest rates. The paper finds that the low-interest-rate policy adopted by the Federal Reserve to rescue the economy affected by the pandemic has contributed to a surge in stock prices over the past two years through four transmission mechanisms, which are supply and demand effects, cost effects, income effects, and expectation effects, as well as the harmful effects of high inflation and a giant stock market bubble.
- Copyright
- © 2022 The Authors. Published by Atlantis Press International B.V.
- Open Access
- This is an open access article distributed under the CC BY-NC 4.0 license.
Cite this article
TY - CONF AU - Xingqi Quan PY - 2022 DA - 2022/04/29 TI - The United States Stock Market Trend Based on Interest Rate Decisions Under Covid-19 BT - Proceedings of the 2022 7th International Conference on Social Sciences and Economic Development (ICSSED 2022) PB - Atlantis Press SP - 142 EP - 146 SN - 2352-5428 UR - https://doi.org/10.2991/aebmr.k.220405.025 DO - 10.2991/aebmr.k.220405.025 ID - Quan2022 ER -