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Jerome Powell: US economy can Face the High Interest Rate

by Didimax Team

Jerome Powell as the Federal Reserve leader delivered his speech in front of the America’s Congress on Wednesday. He said that the economy situation in that country is good and solid. 

That is why; he thought that America can survive to face many kinds of rate hikes that may be happened in some months ahead. This statement brings an optimistic feeling to the people. 

Powell agreed that the economy of USA is so strong this time and in a very sell condition. It is especially to face a tighter monetary policy which may be occured. 

Once again that this speech was delivered in the opening session of Senate banking committee in that country. That becomes a good start to handle many situations ahead. 


Many Sectors are Increasing and Being Positive

Besides the common economic situation, Powell also said that the GDP growth has been increasing significantly. That is especially for second quarter of this year. 

It can be seen from a solid consumption expense which is significantly raising. However, he also agreed that the business investment sector there is slowing down right now. 

The same thing is also happened to the housing market. It means that this sector is cooling down ahead of rate hike raise Which supports the mortgage interest as well.

Furthermore, that Federal Reserve leader is also highlighting the inflation level in America which is now near the highest level in 40 years. The right solution needs to be found.

The Fed Wants to Handle the Inflation

In order to face and solve that problem, Federal Reserve is now making a plan to make inflation is lower than before. Their target is under 2 percent and it really needs a huge effort to make it happens. 

They have a strong commitment to low down the inflation. That is why; they have been moving quickly to reach their target of 2%. Furthermore, Powell also shared his opinion about monetary tightening. 

He said that a decision to make a monetary tightening in some months lately is a right thing to do. The main focus right now is a scenario to make a more Aggresive policies which will be done by the US central bank. 

That could be not easy because the energy market and other commodities are really tight. The cause is the Russia invasion to Ukraine. That tension has a big role to push inflation higher. 

Making a Monetary Policy is not Easy Right Now

Making a monetary policy, especially the effective one, in the middle of a situation which fulls of uncertainties is not easy. It needs a fact that economy is always developed accidentally.

Inflation is quite surprising, especially for a year lately. Jerome Powell added that a further surprise can be happened anytime in the future. That is why; a related institution such as the Fed has to make the right action. 

It means that Federal Reserve must be sensitive and nimble enough to face any economic outlook change . Elsewhere, tge index of dollar is now highlighted too because it is trapped in a testimonial consolidation phase. 

USD is Not Affected by Powell’s Testimony

Generally, US dollar is not affected by the Powell testimonies. It doesn’t bring any meaningful surprise for that major currency. It can be seen from a data released in the market. 

The index of dollar is around the level of 104.23. It means that this currency is 0.05 percent higher than it’s position before, especially from the daily open price. 

Technically, that index is still in a consolidation zone. This zone has been formed since several session before this. The overall situation like this really shows that USD has a great power and US economy will survive as well. 



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