Us GDP in first quarter of 2018 was its best in three years, with the federal reserve raising its growth forecast. Spurred on by trump's tax reform policies, U.S. real GDP grew by 2.2 percent month-on-month in the first quarter of 2018, beating market expectations of 2 percent and the best first quarter performance since 2015. At the June meeting, the fed further raised its forecast for U.S. economic growth in the next two years. This means that the recent solid performance of us economic growth provides an essential basis for the fed to raise interest rates in the future, helping to support the dollar index's recent strength.
As the U.S. labor market continues to improve and the unemployment rate continues to decline, since unemployment is the central focus of the fed's decision, the U.S. employment performance at this time meets the conditions for further rate hikes. In terms of employment data, the us added 313,000 non-farm payrolls in February 2018, far more than the expected 205,000, the highest since July 2016, when the previous figure was revised from 200,000 to 239,000 and the unemployment rate remained at a low of 4.1%. Nonfarm payrolls data for February far exceeded expectations, reflecting a booming U.S. job market. With U.S. real economic activity surging in the second quarter, employers added 223,000 jobs in May and the unemployment rate was just 3.8 percent, a low for the past 50 years that has surpassed expectations of the federal reserve SEP in March, and wages have been rising steadily, up 2.6 percent year-on-year.
The main reason for the fed to raise interest rates is to control inflation in the United States. As we all know, inflation can reflect the development level of a country's economy. If inflation increases gradually, it indicates that the country's economy is growing steadily. However, if the inflation level is too high, it is likely to cause an inflation crisis. Interest rate increase is the most effective way to curb inflation, so the fed will implement the policy of interest rate increase when inflation reaches the level of 2%.
Personal consumption expenditure price index rose 1.97 percent year-on-year in April 2018, close to the fed's 2 percent target, and core PCE price index rose 1.80 percent year-on-year in April, according to the Commerce Department's inflation index data. The fed's June meeting raised 2018 PCE and core pceby 0.2 and 0.1 percentage points to 2.1 percent and 2 percent, respectively, in line with market expectations. The us economy is already operating above its potential growth rate, with full employment and a positive output gap inevitably accompanied by inflation.
On June 14, 2018, affected by the fed's interest rate hike and other factors, a-shares fell again on that day, and the three major a-share indexes rushed back down. By the end of the trading day, the Shanghai composite index fell 0.18% to 3,044.16 points. The shenzhen component index fell 0.76% to 1,0084.18. The chinext index fell 0.75 percent to 1673.32. The potential impact of the fed rate hike on Chinese stocks is twofold: the dollar index continues to fall after the fed r
