Federal Reserve Chairman Jerome PowellReiterating the central bank’s determination to lower inflation, Friday’s statement stated that this is essential for the world financial system.
The strong Federal Reserve commitment to price stability is a contributing factor to widespread trust in the US dollar as a value store. Powell made the opening remarks to a Fed sponsored conference regarding the global role and importance of the U.S. dollar.
Two days later, the Federal Open Market Committee received these comments. voted to raise the benchmark interest rateA targeted range of 1.5% to 1.55% has been increased by three quarters of a percent point. The rate is used by banks to determine borrowing costs for the short-term loans that they give each other. However, it feeds through to many consumer products such as credit cards and home equity loans, as well.
The inflation rate has been rising rapidly over the last year. consumer price index in MayThe past year saw an 8.6% rise in the number of visitors.
Officials at the Fed consider 2% inflation healthy for an economy growing and they have stated that they will keep raising rates until prices are back in this range.
Consumers are hurt by inflation through the prices they payPowell made Friday comments at the supermarket and gas station, as well as many other activities.
Powell stated that “Meeting the dual mandate requires financial stability.” “The Fed’s support for both our dual mandates and financial stability is encouraging the international community in holding and using dollars.”
The Fed has the responsibility of maintaining full employment, in addition to price stability.
Powell spoke out about the role of the dollar as a global finance tool, pointing to the important of instruments such the Fed’s during. the Covid pandemicThey loaned greenbacks worldwide central banks who were in dire need of liquidity.
He pointed out that the world’s financial system will undergo changes, with digital currencies, payments systems such as FedNow and other payment methods like FedNow. The service should be online by 2023.
Fed officials have been discussing the possibility of a digital currency that could support the dollar as the reserve currency in the world.
Powell stated, “Looking to the future, there are rapid changes occurring in the global monetary system which may impact the international status of the dollars in the future.”