The historical impacts and practical enlightenments of the Fed's interest rate cutting policy on international oil prices
Under the transmission of interest rate mechanism,exchange rate mechanism and information effect,and market expectation,the Federal Reserve's interest rate cutting policy has a spillover effect on the international oil market,resulting in the fluctuation of international oil prices.The paper analyzes the relationship between the Fed's interest rate cutting policy and international crude oil prices by constructing the VAR model and impulse response.Considering that the WTI crude oil futures contract was listed in 1983,it takes the time series data of the daily price of WTI crude oil from March 30,1983 to January 23,2024 as a sample,and analyzes historical patterns by combining the six Fed interest rate cutting cycles during this period and the impact of the Fed's"slow-step"rate cuts,"sharp"rate cuts,and"precautionary"rate cuts strategies on international oil prices is different.At present,under the background of the US inflation slowdown and the potential recession risk of the US economy,the Fed may start the interest rate cutting cycle in 2024.The paper proposes that international oil prices may first fall and then rise in the short term,and will gradually return to the normal range in the long run.It is recommended to take measures to deal with the risk of oil price fluctuations and avoid exchange rate risks by relying on Shanghai crude oil futures.
the Federal Reserveprecautionary interest rate cutsthe federal funds rateinternational crude oil prices
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