According to US Federal Reserve officials, the events taking place in Ukraine pose a threat to the global financial system. The Russia-Ukraine conflict is fueling economic worries and geopolitical uncertainty. Moreover, it is already having a serious negative impact on many countries.
The financial market did not have time to get over the coronavirus pandemic but faced a new tough challenge. The Ukrainian crisis coupled with surging inflation put global economic growth at risk. At present, COVID-19 is no longer seen by the Fed as the biggest threat to the world financial system.
“Further adverse surprises in inflation and interest rates, particularly if accompanied by a decline in economic activity, could negatively affect the financial system,” the central bank said in a statement.
Notably, in early March, the Fed assessed the ability of the US economy to respond to the crisis. Federal Reserve Chair Jerome Powell noted that amid geopolitical turmoil, it would not be easy for the government to achieve a “soft landing” of the national economy and ensure a fall in inflation while preventing an increase in the unemployment rate.
