US spreads inflation to other countries

The Federal Reserve's (Fed) objective is now to curb price hikes in the U.S. However, other countries are under pressure caused by the Fed's actions, as their central banks are also forced to raise their own rates at a rapid pace. This is due to a stronger dollar reducing the value of other national currencies. 

Thus, the Fed's decision to raise rates by 75 basis points over the last three sessions forced central banks around the world to tighten monetary policies. Meanwhile, further rate hikes are forecasted. In case the growth rates of other countries lag behind the Fed's level, investors are likely to withdraw funds from national financial markets causing serious issues. 

Central banks in Switzerland, Britain, Norway, Indonesia, South Africa, Taiwan, Nigeria and the Philippines followed the Fed’s policy by raising interest rates last week.

The U.S. regulator's actions also brought the dollar closer to its 20-year high against other currencies. Despite these measures being beneficial for Americans planning to buy abroad, more countries will feel negative effects, as the value of the yuan, yen, rupee, euro and pound is declining. So, the price of importing essentials, i.e. food and fuel, is expected to surge. As a result, the Fed's policy increases pressure on central banks, triggering inflation around the globe.