Good Morning,
Opening Remarks by Chair Jerome H. Powell
At the Division of International Finance 75th Anniversary Conference, Federal Reserve Board, Washington, D.C.
Chair Jerome Powell opened the 75th Anniversary Conference of the Division of International Finance (IF) by emphasizing the division’s indispensable role in shaping U.S. monetary policy and global economic strategy over the past seven decades.
“In my time at the Fed, the IF division has provided invaluable insight into global economic activity, international trade and capital flows, and developments in foreign financial markets,” Powell noted. “Your research and analysis are critical inputs into our monetary policy decisions.”
A New Era for the Global Economy
The IF division was officially established on July 1, 1950, rooted in the post-WWII emergence of the U.S. as a global economic superpower. Powell highlighted a 1948 memo that called for its creation, which stated:
“Problems of international economics and finance have become increasingly large, complex, and significant in recent years…”
“That is the rare economic forecast that turned out to be spot on,” said Powell.
With the Bretton Woods Agreement placing the U.S. and the Fed at the center of the postwar financial system, the need for global economic expertise became clear.
The division has since evolved to monitor foreign policies, model global economic interactions, and help navigate volatile currency markets—especially after the fall of Bretton Woods in the 1970s.
Modeling the World Economy
One of the division’s most important contributions has been its development of macroeconomic modeling tools. Under Ralph Bryant’s leadership, the IF division launched its first multicountry model, laying the groundwork for today’s sophisticated simulations.
“These models have proven useful for understanding how international shocks transmit through the economy and financial markets…” Powell explained. They provide core insights that inform research papers, FOMC briefings, and risk assessments used in monetary policy deliberations.
Prepared for Global Crisis
Powell recalled the IF division’s instrumental role during numerous global crises—from the Latin American debt crisis of the 1980s to the Global Financial Crisis and the COVID-19 pandemic.
During the 2008 crisis, the division helped design swap line arrangements with major central banks to restore dollar liquidity. In 2020, the team spearheaded the FIMA Repo Facility, ensuring dollar availability during pandemic-induced turmoil.
The division has since developed new uncertainty indexes to measure geopolitical, inflation, trade, and economic risks, sharpening the Fed’s ability to anticipate and respond to global shocks.
Conclusion: A Legacy of Global Insight
In his closing remarks, Powell praised the IF division’s enduring contributions:
“For 75 years, nine Fed chairs and countless Board members have greatly benefited from the guidance and counsel of IF staff—not just in times of crisis, but in our ongoing global engagements.”
He emphasized that the division’s deep expertise, research excellence, and global relationships continue to make it a cornerstone of the Federal Reserve’s ability to navigate the complexities of the international economy.
@ Newshounds News™
Source: FederalReserve.gov
Live on Youtube: Link
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BRICS: Morgan Stanley Bets the US Dollar To Decline
The DXY index, which tracks the performance of the US dollar, has failed to sustain levels above 100 for over two months. The greenback continues to slide back to the 98–99 range every time it reaches the 100 mark. In contrast, local currencies are gaining momentum, outperforming the USD.
With BRICS currencies surging and the global financial tide shifting, Morgan Stanley has issued a stark warning: the US dollar is poised for further decline.
Morgan Stanley Forecasts a 9% Drop in the Dollar
As BRICS intensifies efforts to de-dollarize, Morgan Stanley predicts that the US dollar could fall by another 9%, possibly dipping back to levels last seen during the COVID-19 crisis. The bank’s analysts foresee the DXY index dropping to 91, a level not touched in five years, despite global markets largely recovering from pandemic disruptions.
In their latest strategy note, Morgan Stanley wrote that the 10-year Treasury yields could also fall to 4% by year-end, reinforcing the notion that investors are moving away from U.S. assets.
“The outlook for the US dollar is questionable as de-dollarization soars among BRICS nations,” the report stated.
Currency traders are increasingly exploring local currencies as alternatives to the USD, especially as the greenback’s performance continues to lag. On just one recent Monday trading session, the USD dropped 0.51 points, remaining in the red from the opening bell.
Dollar Under Pressure as Global Sentiment Shifts
So far this year, the US dollar is down nearly 9%, even hitting a 12% loss in April following Trump’s “Liberation Day” tariffs. At the time, Morgan Stanley cautioned that BRICS could capitalize on these developments to further the de-dollarization agenda.
It’s not just BRICS members gaining ground. The euro, Chinese yuan, Japanese yen, and Indian rupee are all rising to challenge the greenback’s dominance.
“We think rates and currency markets have embarked on sizeable trends that will be sustained — taking the US dollar much lower and yield curves much steeper — after two years of swing trading within wide ranges,” said Morgan Stanley.
Euro, BRICS Currencies Gain Ground
In June, the Swiss franc, euro, and India’s rupee emerged as the biggest winners against the US dollar. Morgan Stanley strategists anticipate these rival currencies will continue outperforming the USD amid growing global discontent over U.S. tariffs and trade wars.
They project the euro could hit 1.25 by next year, rising from its current 1.13 level. This shift would signify a substantial blow to the USD and a strategic win for the BRICS bloc, which aims to redistribute global power from the West to the East.
Conclusion: Urgency for the White House and Fed
The BRICS alliance is gaining traction as demand for local currencies climbs, while the US dollar continues to weaken. Morgan Stanley’s forecast is a wake-up call:
“The White House must take immediate steps to stop the USD’s erosion or fall prey to the de-dollarization agenda.”
This is no longer a theoretical concern. If current trends hold, the next decade could look very different, with the USD no longer holding global supremacy. The Federal Reserve and U.S. policymakers must act quickly to address these shifting dynamics—or risk watching the dollar’s era of dominance fade.
@ Newshounds News™
Source: Watcher.Guru
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