The US is approaching the brink of economic disaster, which is self-imposed by lawmakers refusing to pay the nation's debt. One condition asked by parliament is for President Joe Biden to agree to new spending cuts and restrictions.

A compromise to increase the power of the government's lending authority has the potential to be reached in the next few days. But the US could lose its reputation as a global economic anchor, followed by a government running out of debt repayments.

The US financial markets are starting to reverberate and spark fears of a recession, which will cause severe job losses and destroy the sense of security in the economy. The pressure on the US is enormous, and it is hoped that it will not cause economic panic.

Negotiations between Biden and Parliament will begin on Monday local time. Representatives of parliament said that talks would take place in the white house. This is one of the steps to end the feud between the president and Congress and defuse the situation.

Hike Again or Take a Pause, Fed Officials Unsure About What To Do Next

US inflation which is still tricky to handle makes the Fed worried about plans to be able to manage interest rates in the foreseeable future. The Fed's policy outlook is bleaker since releasing ten consecutive hikes since March 2022, so this was asked to pause.

Fed watchers expect the central bank officials not to raise rates again when they meet in mid-June. It is stated that the threat of high inflation is far from certain, so interest rates only kill the economy.

"Data in the coming weeks could still show that there was no right decision to skip the meeting. As of today, we haven't gotten there (a decision regarding interest rate hikes to pause)," said Lorie Logan, President of the Dallas Fed.

When talking about inflation, he said that the Fed still needs to make the policies it should have made. He mentioned that the Fed wants to delay and quit but that further rate hikes may be an option but depending on high inflation data or not.

This sentiment still needs to be unanimous because this decision received contra from several parties. Some Fed officials said that if the central bank continues to make borrowing costs more and more expensive.

This will only deepen the recession and make the US economic performance crumble. The Fed speaker even suggested keeping interest rates unchanged this year.

Maintaining high-interest rates to reduce inflation to the target of 2% will work if the unemployment sector is also resolved, which is still tricky. A measure of inflationary pressures underlying decisions from the Fed.

But if you look at the inflation trend happening in many places, this is very concerning for the Fed. The intelligent price index in the restaurant, hotel, and healthcare sectors has yet to show any sign of a significant decline.

"History shows that the Fed will continue to pursue a monetary policy that works for long periods and variation. The demand to feel the full impact of higher interest rates also underlies public demand," said economists and Fed watchers.

The Dominance of the US Dollar in Several Regions has Also Begun to Decline; the Middle East is the latest

The US economic crash has not only had an impact on the domestic market but also globally. This was due to the use of the dollar, which started to be less, and the de-dollarization trend was also accelerating.

Large purchases using the dollar have fallen significantly, and this is due to the devaluation in several areas. The US Dollar in the Middle East has been quite dominant for decades. But the dollar's volatility, when pegged to the Middle Eastern currency, is also no longer suitable.

The US economic sector needs to receive greater scrutiny from the eyes of the world following worrying movements. US economic sectors such as health, business, and hotels are still low. The Fed also still needs to find out what decision they will make at the June meeting.