Global Economies now Hinge on Interest Rates

“The dollar is our currency, but it’s your problem.” This was the statement made by US Treasury Secretary John Connally in late 1971 at the G-10 Rome meetings. Even after 50 years when it was uttered first, the statement seems to be true more than ever. Tight US monetary policy in response to surging inflation in the US is creating issues across and around the global economy. To help bring down inflation, which has hit 40-year highs this year in the US, the US Federal Reserve has aggressively hiked rates in its last three meetings. This has led to the Dollar index, the value of the US currency compared to a basket of other international currencies like the euro, pound sterling, the Japanese yen and others, to its highest in nearly 20 years.