The flagship newspaper for the Chinese Communist Party (CCP) has criticised the US Federal Reserve for engaging in “radical” monetary policy in the wake of its latest rate hike.
On 2 November the Fed announced that it would raise its target interest rate range by 75 basis points, to a band of between 3.75 and 4%.
The move marks the sixth consecutive rate hike by the Fed since March, as well as the fourth consecutive 75 basis point rate hike, for a cumulative increase of 375 basis points.
The People’s Daily – the flagship newspaper for the CCP, had stern words of recrimination for the Fed’s monetary policy decisions, in an opinion piece entitled “US Fed’s Radical Rate Hikes Impact Global Stability and Bring No Benefit to Its Own National Economy” (美联储激进加息影响全球稳定且无益本国经济).
“The US dollar is rapidly appreciating against a raft of key global currencies, triggering turmoil in global financial markets,” said the opinion piece.
“The US Fed’s excessively rapid rate hikes are not only disrupting the order of global financial markets, they are also impacting stable global growth, and are similarly of no benefit to the recovery of its own national economy.”
The People’s Daily piece cited Paul Krugman as stating that the Fed’s large-scale increase in interest rates could be a key reason for US economic decline.
“High interest rates will drive the US exchange rate higher, creating a negative impact on trade, while also driving the cost of collateralised loans higher, eroding the financial breathing space and home-purchasing ability of US households.”
The People’s Daily also cited David Solomon, CEO of Goldman Sachs, as stating that the Fed’s actively tightened monetary policy could cause the US to sink into decline.