Stephen Innes, managing director at SPI Asset Management, has cautioned that the Federal Reserve’s current rate policy may be steering the global economy toward a currency crisis.
Innes emphasized that the Fed needs to make concessions in its rate hikes, as the sustained high-rate policy is exerting pressure on international currencies, particularly the Japanese yen. Since last September, the Fed has held interest rates steady for the sixth consecutive time. However, the prolonged period of elevated rates has contributed to a sharp decline in the yen’s exchange rate.
“The Fed’s stance is causing ripple effects across global markets,” Innes warned. “If adjustments aren’t made, we could see intensified currency volatility that might lead to a broader financial crisis.”
The Japanese yen has experienced significant depreciation against the US dollar, raising concerns over import costs and economic stability in Japan. Analysts attribute this decline to the interest rate differentials between the United States and Japan, where rates remain negative.
Market observers are closely monitoring the Fed’s upcoming policy decisions. Any shifts could have profound implications for currency markets and international economic relations.
Reference(s):
SPI Asset Management: Fed needs to make concessions in rate hikes
cgtn.com
