The American Economy Continues to Grow More Steadily than Others in the World

In the currency markets, the value of the dollar against a basket of currencies rose last week, marking the 10th consecutive week, following the assessment by the U.S. central bank that interest rates may remain elevated for a longer period than expected.

The dollar index, which tracks the value of the U.S. dollar against six major world currencies, rose by 0.2 percent last week to 105.58 points, close to its highest level in six months.

At the same time, the dollar strengthened by 0.1 percent against the European currency, causing the price of the euro to slip to 1.0653 dollars.

The dollar’s exchange rate also rose against the Japanese currency, by 0.4 percent, to 148.37 yen.

The strengthening of the dollar for ten consecutive weeks has not been recorded for nearly a decade, and is a consequence of last week’s assessments by the U.S. central bank.

At their regular meeting, Fed leaders left key interest rates unchanged last week, but new estimates were published indicating that most of them expect that due to elevated inflation, another increase of 0.25 percentage points will be necessary by the end of the year, in the range of 5.50 to 5.75 percent.

Progress Made in the Fight Against Inflation

Fed leaders’ forecasts also indicate that interest rates may remain elevated for longer than expected.

They estimate that next year, a reduction in interest rates may occur in two instances, two less than they expected in June estimates. Thus, next year, interest rates could be lowered by a total of 0.50 percentage points, to 5.1 percent.

At a press conference, Fed Chairman Jerome Powell stated on Wednesday that progress has been made in the fight against inflation, but that the rate should be even lower to say that inflation has been conquered.

Fed leaders estimate that inflation could fall to targeted levels of around 2 percent only by 2026.

The economy, however, remains strong, reducing the risk of recession.

The Fed has raised its estimate for gross domestic product (GDP) growth this year to 2.1 percent, which is double the previous estimates. Next year, growth could slow to 1.5 percent.

All recent data shows that the U.S. economy is growing faster than other major economies in the world.

On the other hand, some reports suggest that the eurozone economy likely contracted in the third quarter.

– The American economy continues to grow more steadily than others in the world, and it seems to me that this will continue for some time – says Michael Brown, an analyst at Trader X.