Unraveling the Impact of the Federal Reserve Rate Hike Policy on Amazon’s Stock Price Based on ARIMA Model

Xingjian Tian

doi:10.54254/2754-1169/64/20231552

Abstract

At the beginning of 2022, the inflation rate of the US economy was high. Consequently, the Federal Reserve initiated a series of 11 consecutive interest rate hikes on March 16, 2022. In this macroeconomic environment of rising interest rates, this article aims to use the ARIMA model to predict Amazon’s stock price after the interest rate hike, based on its stock price before the interest rate hike. It also seeks to compare the difference between the predicted stock price and the actual stock price to assess the impact of the successive rate hike policies on Amazon’s stock price. The study found that the Fed’s continuous rate hike policy would significantly reduce Amazon’s stock price, with its long-term relative decline even exceeding 30 percent. In comparison to previous articles that focused on the stock market or the Federal Reserve’s interest rate hike policy, this article no longer concentrates solely on theoretical analysis or macroeconomic market changes. Instead, it utilizes quantitative methods to place a greater emphasis on Amazon, a representative American internet company. This more specific perspective and more specific data enable investors to gain a clearer understanding of the direction and magnitude of the impact of interest rate hike policies on individual company stock prices. Based on the research results, this paper suggests that policymakers should carefully consider the policy of raising interest rates to avoid causing panic in the stock market. Entrepreneurs should strive to create more positive news, and investors should be cautious about holding stocks in an environment of rising interest rates.

Keywords: Time Series Analysis , ARIMA Model , US Monetary Policy , Interest Rate Policy

Article Information

Received: 10 October 2023

Published: 28 December 2023

DOI: https://doi.org/10.54254/2754-1169/64/20231552

Article Type: Research Article

Cite this article

Tian,X. (2023). Unraveling the Impact of the Federal Reserve Rate Hike Policy on Amazon’s Stock Price Based on ARIMA Model. Advances in Economics, Management and Political Sciences,64,276-287.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About this Volume

Volume Title: AEMPS Vol.64

Part of Series: Advances in Economics, Management and Political Sciences

ISSN: 2754-1169 (Print) / 2754-1177 (Online)

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