ISTANBUL, Sept. 23 (Xinhua) -- The U.S. Federal Reserve's (Fed) latest interest rate hike would not help relieve the country's rising inflation as it has gone off the road under current circumstances, a Turkish economist has said.
The U.S. Consumer Price Index in August surged 8.3 percent from a year ago and the growing inflation is no longer in the hands of the U.S. authorities, Murat Tufan, an analyst with Turkish broadcaster Ekoturk, told Xinhua.
On Wednesday, the Fed enacted the third consecutive three-quarter-point rate hike and signaled a more hawkish path ahead against the surging inflation. The Federal Open Market Committee (FOMC), the Fed's policy-setting body, decided to raise the target range for the federal funds rate to 3 to 3.25 percent.
"There are too many uncertainties. First, we are not entirely out of the pandemic yet" and it is unknown how the Ukraine crisis would evolve, Tufan said.
He pointed out that a major cause of the rising inflation in the United States is the expansion of logistics activities, the rising energy costs, as well as the increasing commodity prices and food prices due to surging oil prices.
The expert blamed the U.S. authorities for not telling the truth as they tried to maintain their political position before the upcoming mid-term election -- promising growth.
In June, the Fed raised its benchmark interest rate by 75 basis points for the first time in 28 years, a move that came too late to control inflation, said Tufan, adding the U.S. authorities had failed to deliver an inflation warning to the market previously.
"I think the Fed is acting weak. It will not succeed in curbing inflation because of many external factors (that are) beyond its control," he said.
Tufan cautioned that the Fed's recent actions would cause "destructive" damage to developing countries including Türkiye, urging the world to take measures against the greenback hegemony.
He added that it's difficult for energy-dependent countries like Türkiye to reduce their dependency on the U.S. dollar, as crude oil is generally priced in the greenback.
"The U.S. dollar has a very serious hegemony. We have debated for years that the American dollar has brought misery and inflation to the world," said the economist. "We argue that this system needs to be changed."
Türkiye's economy has long been struggling against currency devaluation and high inflation, Tufan noted. The yearly increase in producer prices is now around 140 percent, and the annual consumer inflation was at a 24-year high of more than 80 percent in August. On the other hand, the lira lost over 25 percent of its value since the beginning of this year.
Tufan warned inflation in developing countries would turn into hyperinflation with disturbances in production in the coming year if the U.S. inflation continues to go wild.
He also warned that the rise in interest rates and the strengthening of the U.S. dollar are making wealthy nations more prosperous and poor nations poorer.
Thus, the expert called on developing countries to change their foreign exchange reserve compositions and to include more gold and other assets. ■