¿Why not everything is rosy for 'currency Queen?

The dominance of the dollar as world currency has important negative consequences for its alleged main beneficiary, USA and the rest of the world.


Overall debt continues to grow. The biggest risk for damaged situation is the fact that this debt was issued in dollars



The situation reminds increasingly deadlocked. It is true that the US It has the ability to withstand further increases in interest rates, but at the same time, we must monitor the economic activity in countries where a significant part of their exposure to debt dollar. Thus, the Federal Reserve is not fully independent in its attempts to normalize its monetary policy by the risk of causing a global problem. However, the measure is to maintain artificially low interest rates, does not cause anything but the actors keep the dollar loans, increase the imbalance in the world.


In a statement released in December, the Federal Reserve found moderate economic growth for the US economy and a positive dynamic in the labor market. However, the US central bank lowered the average estimate of economic growth this year from 2.4% to 2.2%.



¿Why US does not dare to strengthen the dollar?


Some analysts explain the cautious stance of the Federal Reserve System with political motives.


The recent meeting of the Federal Reserve (Fed) US It left unchanged the basic interest rate, which remains of 0.25-0.5%. According to experts, this decision is that the Fed has been alerted by the state of the US economy. In addition, in November next US will hold presidential elections and a radical change in monetary policy could intensify economic imbalances, published by the Russian newspaper "Izvestia".


In a statement, the Fed noted moderate economic growth in the country, as well as a positive trend on the labor market. However, the US central bank after its recent meeting has lowered the average estimate of economic growth this year from 2.4% to 2.2%.


As reported by the Financial Times, the American Bankers Association urged the Fed to raise rates, since the loose monetary policy "leads to the accumulation of problems in the US economy." Last December the Fed decided to increase the key interest rate for the first time since 2006 by 25 basis points, which explains his decision in an attempt to improve the economic situation. At that time, the markets interpreted this action perspective rapid increase in the rate in 2016, but negative economic trends remain too obvious. For example, in February industrial production in the US fell 0.5%.


Analysts also explain the cautious stance of the Federal Reserve System with political motivation and desire not to enter into dissonance with the European Union.