A statement by the US president that FRS has gone crazy and is raising interest rates too actively, by more than 10%, has derailed the Bitcoin rate. Markets have become too involved in high-risk operations, and such a move could ultimately have a beneficial effect on the stability of the global economy.
Throughout 2018, the FRS has been pursuing a monetary tightening line. It is expected that this year the discount rate will be raised at least twice. This leads to an increase in the US dollar and increased demand for US debt.
However, the situation is detrimental to the national economy. High-interest rates worsen business conditions. A no less serious problem is the more expensive dollar. It makes American goods too expensive, which has a negative impact on the balance of foreign trade. As a result:
As a result, the American economy may be in deep crisis. It simply does not have enough money for normal development, which ultimately will lead to stagnation. However, an expensive dollar boosts demand for treasury bonds and reduces inflation.
Formally, the US president has no right to interfere in the FRS policy. It is an independent body that can make decisions without regard to the White House. At the same time, the head of the Federal Reserve is appointed on the recommendation of the president, which creates a legal conflict.
Let us recall that this year Donald Trump has already criticized FRS several times. This has always led to a short-term fall in the stock market. But the regulator never changed its course of action because of these speeches. And this time, Jerome Powell declared the independence of his department. And that did not discuss the issue of rates with the president.
However, now investors are seeing a sharp sell-off in the stock market, cryptocurrency and derivative financial instruments. It is difficult to say how long it will last. But experts say that such cooling will now save the market from a more serious collapse in the future.