US Dollar a Bastion of Strength After Christopher Waller's Calm Speech
Yesterday was a day that many corporate giants and private individuals across the United States had been waiting for, as it was the day during which Federal Reserve Bank governor Christopher Waller gave an official speech in the public domain regarding the possibilities of the United States economy reaching a point at which it can sustain an inflation rate of 2%.
Monetary policymakers within the United States had set themselves a target of driving down the rampant inflation the country experienced approximately two years ago to a sufficient level that it would reach 2% and remain at a steady 2% for the longer term.
Until yesterday's speech by Mr Waller, there was no tangible information from the Federal Reserve relating to how achievable this target would be. However, companies and investors alike may well have continued to tread a cautious route because of the continual interest rate rises the Federal Reserve had implemented over the course of last year despite inflation continuing to decrease.
This ultra-conservative monetary policy is not exclusive to the United States, of course. The European Central Bank and the Bank of England, both central banks which are responsible for the monetary policy of financial jurisdictions with equally important economies which are home to major currencies, had implemented comparatively strict measures to combat inflation by curbing spending with higher interest rates.
Another symptom of these rate rises alongside high inflation figures is that it increases the amount that private individuals and companies have to pay each month to cover their existing borrowing. This is a very important factor because if the proposed rate cuts take place this year on both sides of the Atlantic, more capital will likely be available from the same revenue figures, allowing companies to invest in growth or to report higher profits due to the lower operating costs compared to the past two years.
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