The continued interest rate hike on the dollar may call for a new “Plaza Agreement”

The US Federal Reserve decided to raise interest rates by three-quarters of a percentage point in three consecutive meetings, while data point to further hikes in the near future. It prompted many countries around the world to take similar decisions to avert the specter of inflation.
A report by the “CNN” website stated that many countries around the world have recently raised interest rates continuously with the rises recorded in the United States, which made some financial experts consider that America transmits inflation to many countries of the world.

The report believes that if countries around the world lag far behind the Federal Reserve, this may constitute a call for investors to withdraw their money from local markets, which may cause serious strikes.

The position of the Federal Reserve also pushed the US currency to its highest levels in two decades once morest a basket of major currencies.

The report quoted the World Bank warning that the risks of a global recession in 2023 have risen as central banks around the world raise interest rates at the same time in response to inflation. This trend will lead to a series of financial crises among developing economies – many of which are still reeling from the impact of the Corona pandemic – “that will permanently damage them”.

The last time the dollar experienced a similar phenomenon, it was in the early 1980s, when policymakers in the United States, Japan, Germany, France and the United Kingdom announced a coordinated intervention in the currency markets then known as the Plaza Accord.

The recent rise of the dollar, and the pain it has caused to other countries, has reopened talk of the possibility of a similar deal. However, the United States seems very far from pursuing a similar idea, according to the director of the US National Economic Council, who stressed that he does not expect that this is what America is heading towards.