Economy 52,864 Posted October 2, 2014 Share Posted October 2, 2014 http://mobile.bloomberg.com/news/2014-10-02/dollar-aids-world-economy-amid-currency-war-for-faster-inflation.html The US has been showing improved economic growth and naturally talks of higher rates begin. It is not appropriate to have the benchmark at 0% once growth is self-sustained as that can cause over-heating, too much inflation and assets bubbles increasing the odds of sustemic risks and financial instability However the stagnant EU, Japan and slowing China have resulted in everyone favouring the US Dollar and the US dollar has been rallying. But if rates are risen the dollar will rise more. The negative effects of a high currency are already being seen in US manufacturing and exports which are slowing.If the US raises rates the currency could rise even more... If they dont raise rates by mid 2015 as planned they risk financial instability. A dilema the Fed now faces Link to post Share on other sites More sharing options...
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