After the first regular monetary policy meeting this year, the Federal Reserve announced a 25 basis point increase in interest rates, raising the US federal funds rate to between 4.5% and 4.75%. This is also the eighth consecutive increase in interest rates by the Federal Reserve, which has increased by 450 basis points in less than a year, reaching a new high since September 2017. At the same time, it continued to shrink its balance sheet by US $95 billion per month (including reducing its holdings of US Treasuries, institutional bonds and institutional mortgage-backed securities). Although the Federal Reserve has not relaxed on the issue of raising interest rates, the factors driving inflation in the United States have not subsided, and inflation in the United States will remain relatively high. As the interest rate increase policy continues, its side effects such as restraining the economy appear. The market generally expects that the Federal Reserve will continue to raise interest rates by 25 basis points in March and May this year, and the US federal funds rate may exceed 5%, reaching the highest level of interest rate since this century. The lag effect of the radical interest rate increase and the economic recession and financial risk or fermentation brought by the interest rate increase. Moreover, the stronger interest rate increases implemented by the European Central Bank and the Bank of England will also have a negative spillover effect on the US economy. The Federal Reserve stressed that it would not cut interest rates this year. There are two differences between this interest rate increase and the last interest rate meeting. One is that the interest rate increase range is reduced from 50 basis points to 25 basis points. This is the second time that the Federal Reserve has slowed down the pace of interest rate increase since this round of interest rate increase cycle, which is in line with market expectations. It is also the choice of the United States under the slowdown of inflation and economic contraction. Second, it clearly stated that it would continue to raise interest rates without reducing them. Unlike the statement that the Federal Reserve repeatedly stressed last year that it would cut interest rates at the end of this year, Federal Reserve Chairman Powell proposed that it would be appropriate to continue to raise interest rates, and that it would not cut interest rates this year. After the interest rate increase, the interest rate will be suspended rather than cut at the end of the year. This statement is the hawkish performance of the Federal Reserve after the interest rate increase and reduction again. It is noteworthy that the Federal Reserve pays attention to employment indicators. Powell said on the same day that the interest rate increase was to control the inflation target at 2%, and stressed the policy goal of promoting employment. The implication is that although the 2% inflation target of the Federal Reserve cannot be reached this year, the employment target has been better achieved. Although the labor participation rate of the United States has not reached the pre-epidemic level, its unemployment rate has dropped from the high of 14.7% in April 2020 to the low of 3.5% in December 2022. The growth rate of inflation in the United States has slowed down but is still difficult to control. After the Fed raised the most aggressive interest rate hike in more than 40 years, US inflation hit a high of 9.1% in June 2022 and then turned down, and fell back to the level of 6.5% in December. However, according to the agency's prediction, inflation in the United States will remain at a high level of about 6% this year. The most important thing is that the factors driving inflation in the United States have not been eliminated. At present, uncertainties affecting the world economy and driving up inflation still exist, the Ukrainian crisis has not stopped, supply shocks continue to exist, geopolitical conflicts and other factors still disturb energy and food prices, and the sanctions imposed by the United States and Europe on Russia backfire and push up inflation. Multi-country economic restart and growth have boosted demand, and global supply chain game has supported inflation. Looking forward to the whole year, the trend of the US economy is not optimistic. In December 2022, the broad money supply (M_2) of the United States dropped by 1.3%