THE IMPACT OF MACRO ECONOMIC FACTORS ON THE FED FUNDS RATE IN SOUTH EAST ASIAN EMERGING MARKETS

Abstract

Recent studies and policymakers must emphasize the importance of macroeconomic issues in determining the federal funds rate. Consequently, this article examines the impact of macroeconomic parameters like as gross domestic product (GDP) growth, exports, inflation, population growth, and foreign direct investment (FDI) on the fed funds rate in south Asian emerging nations. From 2011 through 2020, the article extracts secondary data from secondary sources such as World Development Indicators (WDI) and Central banks. In addition to using the robust standard error and the fixed effect model (FEM) to test the relationship, the article employs the robust standard error and the Fixed Effect Model (FEM). The results demonstrated that GDP growth, exports, inflation, population growth, and FDI positively and substantially affect the fed funds rate in south Asian emerging countries. Using understudied macroeconomic indicators, this article advises policymakers on changing the country's fed funds rate.