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US Fed fighting inflation at expense of other countries’ welfare

US Fed fighting inflation at expense of other countries’ welfare

 No matter whether the US dollar is weak or strong, it poses a threat to the global economy. Analysts of any caliber always come up with their reasoning. It is an accepted fact that the US economy and the Federal Reserve make a profound impact on financial markets and set trends for the global economy.

At the policy meeting in September, the US central bank decided to raise the federal funds rate by 75 basis points. Meanwhile, the US dollar has rallied against major currencies to the strongest level in two decades. In turn, experts seized on the excuse for predicting another economic upheaval. The greenback owes its strength to the Fed’s aggressive monetary tightening. The overvalued US dollar is putting a strain on the whole global economy. Chinese periodical Global Times warns that “Washington keeps laying mines but never removes them, which will eventually explode the US itself.” The US dollar has been developing “a once-in-a-generation rally’ because the Federal Reserve endeavors to defuse high inflationary pressure. “For many countries in the world, this might be the beginning of another nightmare,” the periodical comments on the Fed’s policy decisions. "When the US is sick, the world has to take a pill," the author concludes. 

“A super strong US dollar and the fall of other currencies will, to a certain extent, ease the scorching inflation in the US economy, but the world will have to pay for it.” Looking back, every cycle of the US dollar’s appreciation left a bitter aftertaste.                 

 

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