The US central bank is still very tough on inflation. It is raising interest rates at the highest rate in 40 years and the result is, among other things, a strengthening dollar against all world currencies. But such politics may soon be over.
“The Fed’s policy has created a strong dollar,” James Bullard, head of the Federal Reserve’s St. Louis branch, said during a meeting of representatives of the International Monetary Fund and the World Bank in Washington.
The Fed will ease if inflation falls
According to Bullard, the Fed will relax its strictness once it sees that there has been a substantial reduction in inflationary pressures. “And that there will be no need to raise rates,” added James Bullard. According to him, although the Fed’s policy is strict, it has not yet caused serious problems in the financial markets.”They’re not zero, but they’re relatively small compared to what you’d expect with such a rapid rate increase,” Bullard said.
There will be another increase in the interest rate
The current level of the Fed’s benchmark interest rate for open market operations is set at 3 to 3.25 percent. And there will probably be another increase at the next monetary policy meeting. We will find out on November 2, when the Fed will announce the results of its monetary policy decision.
