The Federal Reserve raised interest rates by another 75 basis points, what is the driving force behind the sharp rise in steel prices?

The high-profile Federal Reserve's July interest rate meeting has finally settled.

At 2 a.m. Beijing time on July 28, the Federal Reserve issued a decision statement: raising the interest rate on reserve balances (IOR) to 2.40%, in

line with market expectations, compared with 1.65% previously. The discount rate was raised by 75 basis points to 2.50%

The Fed has declared that continued rate hikes are appropriate. The Fed is firmly committed to bringing inflation back down to its 2% target. U.S.

inflation remains stubbornly high, reflecting supply-demand imbalances caused by the pandemic, rising food and energy prices, and broader price

pressures. The Russia-Ukraine conflict and related events have created additional upward pressure on inflation. While employment growth has been

strong, both recent spending and production indicators have weakened.

The Fed is shrinking its balance sheet at the pace announced in May, reducing US Treasuries by up to $30 billion per month and $17.5 billion in

agency mortgage-backed securities (MBS) starting June 1, and will double the maximum monthly reduction in three months. The decision to raise

interest rates was unanimously passed.

As the so-called bearish is all good, the three major stock indexes of the U.S. stock market rose sharply. So far, the Fed has raised interest rates at

four consecutive monetary policy meetings this year, and raised interest rates by 75 basis points for the second time in a row.

The impact of the Fed's interest rate hikes on China's domestic economy is noteworthy. First of all, it will increase the pressure of RMB depreciation,

and secondly, the interest rate inversion of China and the United States, and the pressure of capital outflow will increase, which will have a certain

degree of impact on the domestic capital market.

It has to be said that the impact of the world's largest economy from a super-large-scale "water release" to an unprecedented "pumping" on the

price trend of the commodity market is long and far-reaching. The impact on the steel market price, first, will inhibit the demand of the steel market;

The second is to suppress the long-term rise in iron ore and coking coal prices.