At the same time, to reduce inflation to the 2% target, the US central bank, The Fed, raised its monetary policy interest rate 4 (four) times during 2018 or 9 (nine) times since the normalization of monetary policy began in December 2015, to 2.25%-2.50%, an interest rate hike that President Donald Trump opposed.
The impact of the US-China trade war and US monetary policy tightening through trade channel led to the global economic slowdown. The slowdown was felt not only in these two largest economies in the world, but also in other countries due to China’s central position in the global supply chain. Even larger and immediate impact occured in financial channel.