DYNAMICS OF THE LEADING STOCK INDEXES AND THE KEY CREDIT RATE OF THE US DURING THE RUSSIAN-UKRAINIAN WAR

Анотація

The article is devoted to the study of the impact of the Russian-Ukrainian war on the dynamics of the key credit rate of the Fed – Federal Funds Effective Rate, stock indices Dow Jones Industrial Average, S&P500, NASDAQ Composite and the rates of economic growth of the American and the world economies in 2022–2024. The study confirmed, that stock indexes are the first to react to events that are important for the world economy. In particular, their dynamics reflected the risks of price increases expected by investors on the fuel and grain markets. The article reveals that the military aggression of the Russian Federation against Ukraine caused a number of negative consequences both for the world economy in general and for individual countries in particular. Tremendous humanitarian and economic loses were faced by Ukraine. European countries, which were connected to the participants in the conflict by trade and logistical ties, as well as property relations at the level of enterprises, suffered the most comparing to the other economic world. The American economy was less affected, but in anticipation of a surge in inflation, the Fed was forced to raise interest rates, which slowed economic growth in the United States. In general, the conflict led to a decrease in the growth rate of the global economy. The article concludes on the success of the tight monetary policy of the United States in reducing inflationary pressure. This gives reason to expect a decrease in the federal funds rate in the near future, which is also evidenced by the positive dynamics of stock market indices. However, given the lack of visible prospects for ending the Russian-Ukrainian war, a further slow- down in the pace of economic growth of both the global and American economies is expected. The study has also used correlation analysis, which hasn’t revealed a significant correlation between the dynamics of the Federal Funds Effective Rate and the studied stock indices S&P500, DJIA and NASDAQ Composite, which can be explained by the possible non-linear nature of the relationship between the discount rate and stock indices, which will be the subject of further studies.

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