A stronger dollar could hurt the US outlook and tilt the Fed’s path.

(Bloomberg) — A stronger dollar could negatively affect the US economic outlook and change the level at which the Fed ultimately raises interest rates, economists surveyed by Bloomberg said. Affects the US and influences monetary policy over the next 18 months. The dollar has gained about 13% against other major currencies this year as geopolitical tensions following Russia’s invasion of Ukraine and the Fed aggressively raise rates to combat inflation. It is the highest in 40 years. A survey of 40 economists was conducted from October 21st to 26th, and the campaign will continue with a 75bps increase on Wednesday. According to their final forecast, interest rates will reach 4.4% by the end of the year, from their current target range of 3% to 3.25%, and plunge to 4.6% by 2023. Chairman Jerome Powell and his colleagues are deliberately trying to cool the economy and relieve price pressure through tightening. The US financial situation, where the value of the dollar is an important component. A stronger dollar tends to curb inflation by reducing import costs and reducing domestic production as it raises export prices. “The Fed and the global Fed are in an uncomfortable position to sabotage demand to meet supply-constrained global economies.” Diane Swonk, chief economist at KPMG LLP. said in response to the survey: “They understand there are ramifications, but given their country’s obligations, there is no open way to address these risks.” Story Continues Bloomberg Economist Says…”In general, the trade deficit will surge when the dollar appreciates as much as it has seen since last year. But even though we’re already in the process of appreciating about 5/4 of the year, the effect isn’t that great. “Oddly enough, this hasn’t happened so far. One possible explanation is that the US is increasing exports of energy products. The absence of these austerity channels means that the dollar appreciation has historically been less contractile for the economy.” – Anna Wong (U.S. Chief Economist) Economists are divided on how severe financial stress and tensions will be: The majority is influencing central bank movements 44% of the survey found that the Fed is aggressive despite possible stress They said they believed they could end austerity completely, but 38% said policy makers should cut rates earlier than expected, and 18% said the Fed would not be able to raise rates as much as planned Julia Coronado, founder of MacroPolicy Perspectives LLC said “the speed to avoid financial instability.” Survey respondents expect interest rates to peak at 5% early next year, and the majority of economists now expect a US and global recession. Nouriel Roubini has warned that troubles in financial markets could backfire on the Fed and other central banks in fighting inflation. It’s definitely not in the US now, but internationally. Fiscal pressure was most recently evident in the UK, where the Bank of England had to intervene to support the market. Liz Truss stepped down as prime minister after 44 days in power in a backlash against her low-tax economic plan that had shaken investor confidence. A strong dollar The Fed is sometimes referred to as the world’s central bank, reflecting the importance of the United States in the global economy. Three-quarters of economists say this is an adequate explanation, but 33% say the Fed doesn’t fully understand its role. In contrast, 22% said the Fed is only responsible for the US economy and its domestic mandate of maximum employment and price stability.
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