Because the rate cut has long been predicted, it is largely priced into the value of the dollar in international markets.

“Exchange rates tend to adjust when a decline is expected,” Laura Veldkamp, ​​professor of economics and finance at Columbia Business School, told USA TODAY on Tuesday before the decision was announced. “The level of the exchange rate is below what people are likely to lose.”

Veldkamp said the bigger change would occur if the Fed meets expectations and either leaves or raises interest rates on Wednesday. Such a surprising change in expectations could have caused a larger jump in the value of the dollar against foreign currency.

“If you need currency, buy it when you need it,” Veldkamp said, especially since any exchange rate adjustments following the Fed’s decision will likely be minimal. “Overall, currency speculation is a very bad idea. . . . Even professionals don’t do it very well.”

Lagarde spoke at the “Monetary Dialogue” session of the Economic and Financial Affairs Committee of the European Parliament (EP).

Stating that the ECB has started a rapid and comprehensive process to normalize monetary policy in the last 1 year, Lagarde said, “We first ended net asset purchases in a few months. Then we started to increase our policy rates in the fastest way ever.” used the phrase.

Lagarde explained that the Russia-Ukraine war threatens energy security, disrupts supply chains and raises inflation far above its targets.

Pointing out that the repercussions of the war were felt not only in Europe but also around the world, Christine Lagarde said that this caused central banks to raise interest rates and tightened financing conditions around the world. “Europe has been hit particularly hard by this, given our proximity to war and our dependence on energy imports,” Lagarde said.