Xinhua News Agency, Cairo, October 28 (Xinhua) Exclusive interview: U.S. monetary policy has aggravated the trauma of the world economy – Interview with Egyptian economist Jabala
Xinhua News Agency reporter Shen Danlin and Yao Bing
Economist Walid Jabala, a member of the Egyptian Association of Political Economy, Statistics and Legislation, said in a recent interview with Xinhua News Agency reporters in Cairo that over the past year or so, the U.S. Federal Reserve has successively raised interest rates, which has aggravated the world economy. Trauma, with developing countries being the hardest hit.
Jabala said that the high interest rates in the United States have a siphoning effect on global capital. Many fragile developing countries are short of dollars and their economies are on the verge of collapse. “The continued interest rate hikes in the United States have led to the withdrawal of more than 20 billion U.S. dollars of foreign capital from Egypt.”
The U.S. consumer price index rose 3.7% year-on-year in September this year. Federal Reserve Chairman Powell recently stated that although U.S. inflation has dropped significantly, it is still significantly higher than the 2% long-term target set by the Federal Reserve, and the Federal Reserve will still retain the option of further raising interest rates.
Jabala said that the United States’ high interest rate policy can curb inflation caused by an increase in the money supply, but it cannot alleviate inflation caused by an increase in the cost of production factors. Inflation in the United States is caused to a certain extent by rising oil and natural gas prices. Rising energy prices have driven up the costs of other production factors.
“The United States uses monetary policy to solve economic problems that cannot be solved by monetary policy alone,” he said.
Jabala also stressed that raising interest rates would also be detrimental to investors in the U.S. and other markets because high interest rates prevent them from obtaining financing at an appropriate cost. “This makes investors reluctant to expand investment, which in turn affects the supply of investment in global markets.”
He called on developing countries to establish corresponding early warning systems. “Before a currency crisis occurs, this system should play a role in crisis prediction and prevention.”
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2023-10-29 05:39:00
