Guido Traficant, an economics professor at the European University in Rome, said in an exclusive interview with Xinhua News Agency recently that the US Federal Reserve's radical interest rate increase has driven the US dollar to continue to strengthen, leading to the weakness of the euro area's local currency, increased inflationary pressures and capital outflows. Traficant said that it is difficult for the European Central Bank to continue to follow the decision of the Federal Reserve to raise interest rates passively. In the future, the negative spillover effect of the Federal Reserve's aggressive interest rate increase on the euro area and the European region cannot be eliminated. Since March, the Federal Reserve has raised interest rates by 300 basis points. As a result, the exchange rate of the euro against the US dollar continued to fall, hitting a new 20 year low in September. The aggressive interest rate increase by the Federal Reserve has had a serious negative impact on the euro area. Traficant said that the Federal Reserve raised interest rates to promote capital flows to the United States. While the euro depreciated against the dollar, the bond market in the euro area was in violent turmoil. The government bond yields of some member countries rose, increasing the borrowing costs of European governments. In Italy, the high public debt, together with the high inflation, energy crisis and other factors faced by the euro area countries, make the financial situation particularly tense in the euro area countries. Traficant pointed out that the radical interest rate increase by the Federal Reserve is also one of the main factors influencing the rising inflation in the euro area. In September, the inflation rate in the euro area reached 10% at an annual rate, a record high, far exceeding the medium-term inflation target of 2% of the European Central Bank. In order to cope with continued high inflation, the European Central Bank, after years of loose monetary policy, had to raise key interest rates twice in July and September this year by 125 basis points. Traficant said that because international commodities are denominated in dollars, Europe is facing greater price pressure as the United States increases interest rates and the dollar appreciates against the euro, and the European Central Bank and the Bank of England have to raise interest rates passively. However, due to the weakness of the euro area economy, the European Central Bank cannot keep pace with the United States in raising interest rates. Traficant pointed out that in addition to currency devaluation, the European economy is also facing additional pressure brought by geopolitical tensions, and the risk of economic recession is growing. Traficant believes that the European Central Bank is almost unable to cope with the negative impact of the radical interest rate increase on the Federal Reserve in the short term. For Europe, policy measures must be taken to mitigate the impact on the macroeconomic level. (Liu Xinshe)
Edit：Yi Bing Responsible editor：Wei Li Bin
Source：XinhuaNet
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