The American economy is now in an excellent state, which means the Federal Reserve has every reason to continue tightening monetary policy. The regulator has already raised the benchmark rate and it seems to be just the beginning of a series of hikes.
Thus, the US central bank increased the interest rate by 25 basis points to 0.25%-0.5% in March, for the first time since 2018. According to the Fed’s official statement, by raising rates and tightening monetary policy, the regulator expects inflation to return to 2% and the labor market to remain strong. This is the main reason behind the 0.25% rate hike, the central bank explained. Moreover, the interest rate could be raised further at the upcoming meetings. Commenting on the impact of anti-Russian sanctions on the American economy, a US Treasury Department spokesperson asserted that any restrictions would not stop further tightening of monetary policy. Likewise, Western sanctions would not prevent Russia from paying its dollar-denominated debt at least until the end of May. Technically, Russia can service its debts and pay creditors in dollars throughout May in spite of the restrictions imposed on its central bank and other financial institutions, the US Treasury Department spokesperson said.
