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Ekonomické zprávy
26.11.2021

Federal Reserve risks falling behind the interest rate curve - RBNZ former governor

Donald Brash, ex-head of Reserve Bank of New Zealand, said that amid the rapid growth of inflation and the tightening of the situation in the US labor market, it remains unclear which part of inflation is temporary and which is not.

According to Brush, the Fed will continue to pump money into the economy next year, while keeping interest rates at the current level.

However, the minutes of the Fed's November meeting noted that in the event of a further increase in inflationary pressure, policymakers will discuss the possibility of an earlier rate hike than expected.

According to investors' forecasts, at its December meeting, the Fed will discuss whether to accelerate the pace of reduction of the quantitative easing program.

Brush also voiced his opinion on global events. When asked whether tensions between the US and China could increase, Brush pointed to the "serious risk" of such a development. Brush explained that if per capita income in China even doubles compared to income in the United States, the Chinese economy will increase significantly, which "obviously" will create tension.

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