40 years ago, Nixon's staff said: "The US dollar is our currency, but it is your problem." With the end of the two-day monetary policy meeting on on 221, the issue of the US dollar was once again thrown to everyone.
federal funds rate target range will be raised by 75 basis points to between 3% and 3.25%. This is the third consecutive rate hike of 75 basis points this year. Fed Chairman Powell said at a press conference held after the meeting that in order to reduce the current high inflation to the Fed's target level, the U.S. economy will experience a period of growth below the trend level and the labor market will also weaken, but this is a pain to bear, because it is especially important to restore price stability. Powell's speech after the meeting once again demonstrated his determination to fight inflation to the end.
However, the prospect of suppressing inflation is worrying. After all, interest rate hikes are only monetary policy, and inflation occurs in multiple factors. Several major factors are beyond the control of the Federal Reserve. First, the Russian-Ukrainian war and Europe's toughness both pushed up the price of raw materials; second, China's strict domestic epidemic prevention policies have caused fluctuations in supply; third, the unilateralism of the United States has destroyed the original industrial chain, and breaking and breaking chains will inevitably increase the costs of suppliers. Finally, the loan interest rate in the United States is now as high as 6%, and the rent price may also eventually lead to a backlash due to this interest rate hike.
Although the prospect of interest rate hikes in suppressing inflation is unknown, one thing is obvious, that is, the pressure on foreign currencies in various countries is under pressure. The increase in interest rate spread of will inevitably cause foreign capital to flow back, especially for those countries with less foreign exchange reserves. Will it take the old path of currency depreciation? It reminds people of the financial crisis in 1997, and the Thai baht has depreciated by 80%. However, after more than 20 years of development, the pressure under the Asian financial market is indeed incomparable, but the imported inflation and monetary pressure are still worrying.
We are indeed experiencing major changes unseen in a century, and we will eventually be a generation that enters historical books.
