USA: the fight against inflation does not cause “disorder” in the financial markets (Yellen) – 09/27/2022 at 23:37

The monetary tightening led by the American central bank (Fed) does not cause “disorder” on the financial markets, estimated Tuesday the American secretary of the Treasury Janet Yellen, while ensuring “monitor carefully” the developments.

“The United States reacted more quickly”, resulting in “upward pressure on the dollar and downward pressure on many other currencies”, a consequence of “what is necessary to fight against inflation”, underlined Ms. Yellen during a press briefing.

But “I think the markets are working well,” she added.

“The global environment is one of high inflation in many advanced economies and central banks are looking to reduce it in almost all countries, at different rates,” detailed the Treasury Secretary, acknowledging an effect on rates change.

The main currencies are almost all in pain against the dollar, the euro even approaching its lowest level in 20 years on Tuesday, at 0.9554 dollars for one euro.

The pound sterling is also heckled, reaching an all-time low against the dollar overnight from Sunday to Monday, notably under the effect of British budget announcements, before rebounding slightly.

Asked about the subject, Janet Yellen estimated that the major impact of the announcements “was for the pound and the United Kingdom”, without “going into detail concerning the British announcements”.

“The tightening of rates has an effect on the markets and strengthens the dollar”, simply recalled Ms. Yellen.

The Treasury Secretary has tried in recent days to be optimistic about the impact on the US economy of fighting inflation, while the Fed has raised rates several times and plans to do so again before the end of the year.

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While Fed Chairman Jerome Powell estimated on September 21 that the fight against inflation would be painful for the economy, Mrs Yellen on the contrary considered that it was possible to reduce inflation while maintaining the good labor market health.

“I think a path exists to successfully bring down inflation while maintaining… a strong labor market. And I very much hope the Fed gets there,” she said Thursday.

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