On Thursday, President Joe Biden batted down worries that the economic upheaval in the UK may spread to the U.S., despite claims that his government has been informed that a similar catastrophe may occur.
When Prime Minister Liz Truss resigned after her fiscal agenda was overturned, Biden was asked whether he was concerned about the political and economic unrest that might soon erupt in the UK.
No, I don’t believe they’re that important, he said.
But according to The New York Times, his administration has been inquiring with authorities about the possibility of a similar market decline in the US.
And they were informed that while a market catastrophe doesn’t seem imminent, America could be able to.
The torpedoing of the pound and other British assets by traders in response to Truss’ new austerity policy sealed her doom. As a result, mortgage rates skyrocketed and the Bank of England intervened to support British bonds.
And as interest rates rise, the likelihood of a recession is increasing, according to Biden and other international leaders who are carefully monitoring the situation.
In recent weeks, Biden has met with his top economic advisers to examine the issue as a market collapse might damage strategies to combat the high rate of inflation.
The American dollar is still strong.
In the last year, the ICE U.S. Dollar Index DXY, -0.11%, which gauges the strength of the dollar versus six other currencies, has increased by 19.5%.
But amid worries about what the Federal Reserve would do to try to reign in the excessive inflation that led to a jump in food and gas costs, the stock market has been jerky.
Patrick Harker, president of the Federal Reserve Bank of Philadelphia, issued a warning on Thursday, saying that when policymakers meet in November, they are likely to hike interest rates to ‘far over’ 4% this year.
The rate would rise for the fourth time in a row.
At a gathering held at the Greater Vineland Chamber of Commerce in Vineland, New Jersey, Harker said, “We are going to keep hiking rates for a while.” Given our very sad lack of progress in reducing inflation, I predict that by the end of the year, we will have reached far over 4%.
The cost of house and credit card loans will increase as a result of rising interest rates, but Biden officials claim that the American economy is resilient enough to weather these shocks.