Impact of the Fed's Rate Hike Policy on the Prices of Commodities and Real Estate

Abstract

The United States has experienced a long period of stubborn inflation since 2022, so the Federal Reserve began to raise interest rates in March 2022, which will cause asset price volatility and valuation changes. The purpose of this study is to explore the changes of some commodity and real estate prices under this background, and to put forward reasonable valuation forecast suggestions. This research mainly analyzes the price changes of crude oil, corn, and real estate under the background of the Fed's interest rate hike and analyzes the changes of asset prices by constructing the structure vector autoregressive (SVAR) model and the grid connectivity model. According to the analysis, the results show that the Fed can influence real asset prices through its monetary policy, and other factors inevitably interfere. The empirical data from March 2022 to March 2024 also show that with the Fed's multiple interest rate hikes, asset prices are affected by different degrees of decline.