The U.S. Federal Reserve (the Fed) on Wednesday decided to hold its benchmark rate unchanged, a move which Chinese economists attributed to a weaker-than-expected economic growth plus persistently high inflation.
After a two-day meeting, the Fed left interest rates unchanged at a 22-year high of 5.25 percent to 5.5 percent and for now it has kept their benchmark rate unchanged for a sixth straight time since September last year.
The central bank's latest decision came just a few days after the Commerce Department reported on Friday that the U.S. personal consumption expenditures (PCE) price index, the Fed's preferred inflation measure, ticked up to 2.7 percent in March.
Amid stubborn inflation that shows no sign of abating, U.S. gross domestic product (GDP) growth slowed significantly to an annual rate of 1.6 percent in the first quarter, marking a sharp drop from the 3.4 percent in the fourth quarter, according to the data released last week.
"The U.S. economy is at risk of 'stagflation.' According to the first-quarter data, GDP has declined, and inflation surged beyond expectations. This puts the Fed in a dilemma. If interest rates are cut, it will easily push up inflation. If interest rates remain high, the high-interest-rate environment will erode the economy. At present, it seems that the Fed has finally decided to prioritize controlling inflation and has repeatedly delayed the cuts," said Gao Ruidong, chief economist of Everbright Securities, a leading financial services institution in China.
Economic experts also said that the abuse of the dollar and the irresponsible monetary policy in the country are jointly intensifying pressure of many economies around the world.
For instance, Japan's core consumer prices rose 2.6 percent in March from a year earlier, marking the 24th straight month the index has remained above the central bank's 2 percent inflation target.
South Korea's consumer price index (CPI) gained 3.1 percent in March from a year earlier after climbing 3.1 percent in February and 2.8 percent in January, according to Statistics Korea.
"The United States has utilized the U.S. dollar or its dominant position as the world's reserve currency to exert control over the excessive supply of dollars or global credit. However, concerns and doubts regarding the stability of the U.S. economy are growing," said Lu Zhe, chief macroeconomist of Founder Securities Co., Ltd.
"It's now widely expected in the market that the Fed's interest rate cut will probably be postponed until after September. The prolonged high value of the dollars has a direct and substantial impact on other countries worldwide. It poses an even more severe challenge, especially for countries with high foreign debt and a history of high inflation," said Wang Qing, chief macroeconomic analyst of Golden Credit Rating.
Fed holds rates steady as inflation fight stalls
Fed holds rates steady as inflation fight stalls
Fed holds rates steady as inflation fight stalls
Chinese President Xi Jinping held a restrictive meeting with Russian President Vladimir Putin on Thursday at Zhongnanhai in Beijing, during which they had in-depth exchanges on strategic issues of common concern.
The world is undergoing changes unseen in a century and entering a new period of turbulence and transformation, Xi noted, adding that in the face of the ever-evolving world landscape with volatility and turmoil, China has maintained its strategic resolve.
He said that under the leadership of the Communist Party of China, the Chinese people have overcome various difficulties and challenges, and are striving to promote high-quality development and Chinese modernization.
China is willing to work with Russia and other countries to enhance solidarity and cooperation, steer global governance in the right direction, jointly safeguard international fairness and justice, and promote world peace and common development, Xi said.
Noting that China's development is unstoppable and that no force can contain China's growth and progress, Putin said that Russia is willing to improve cooperation with China and other Global South countries to promote international fairness and justice, and to work toward a more equal and multipolar world.
The two heads of state had an in-depth exchange of views on the Ukraine crisis.
Xi elaborated on China's consistent position and efforts to promote the political settlement of the Ukraine issue, stressing that to deal with any major issue, it is necessary to address both the symptoms and the root causes, and to plan for the present as well as for the long term.
He said the core of the Global Security Initiative is advocating the vision of common, comprehensive, cooperative and sustainable security, and the fundamental solution to the Ukraine issue is to promote the establishment of a new balanced, effective and sustainable security architecture.
Xi said China supports the convening of an international peace conference recognized by Russia and Ukraine at an appropriate time with equal participation and fair discussion of all options, so as to push for an early political settlement of the Ukraine issue, and China stands ready to continue to play a constructive role in this regard.
Putin introduced the relevant views and positions of Russia, saying that Russia appreciates China's objective, just and balanced position on the Ukraine issue and welcomes China to continue to play an important and constructive role in the political settlement of the issue. Russia is committed to resolving the Ukraine issue through political negotiations and is willing to demonstrate sincerity and maintain close communication with China in this regard, he said.
Xi said that over the years, they have had many meetings and every exchange has been candid, in-depth and fruitful.
Xi said he is ready to stay in close contact with President Putin and work together to steer the development of China-Russia relations in the right direction, guide the China-Russia comprehensive strategic partnership of coordination for the new era to achieve steady and lasting progress, bring more benefits to the two peoples, and contribute to world security and stability.
Putin thanked Xi for his warm hospitality, saying that he is willing to maintain close communication with Xi, implement the important consensus reached between them, and ensure the full development of the Russia-China comprehensive strategic partnership of coordination for the new era.
Xi holds restrictive meeting with Putin at Zhongnanhai
Xi holds restrictive meeting with Putin at Zhongnanhai
Xi holds restrictive meeting with Putin at Zhongnanhai
Xi holds restrictive meeting with Putin at Zhongnanhai
