00:00The Fed's first rate hike in more than three years marks a sharp reversal
00:05and a new test for investors who had been positioning for lower U.S. rates.
00:09And with the dollar likely to benefit from higher U.S. rates,
00:13the ripple effect could be felt across Asia,
00:16particularly in emerging and export-dependent economies.
00:20When the U.S. interest rate rises, money often flows towards the dollar
00:24and away from riskier markets such as emerging markets in Asia.
00:30And in Asia, export-oriented economies like China and Vietnam are particularly exposed
00:39because they depend heavily on global trade and also international capital flows.
00:45So for much of Asia, the Fed matters
00:48because the U.S. remains one of the region's most important customers.
00:52Kevin Walsh, the Fed chairman, has defied expectations
00:55with a unanimous 25-basis point rate hike,
00:58taking the benchmark rate to 4% from 3.75.
01:02Walsh defended it as necessary to tackle inflation,
01:05which has been fuelled by war, tariffs and booming investment in artificial intelligence.
01:10Well, I think the Fed's decision mattered not just because of today's right move
01:15but because of what it signals about the future path of interest rate,
01:19inflation and global economic conditions.
01:22But overall, that means the Fed thinks that the fight against inflation is not over yet.
01:29That is why it is hiking its rate.
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