The Federal Reserve is closely monitoring the situation in China, as the country\’s reopening could have a major effect on global inflation. As the world\’s largest economy in terms of purchasing power and two-way trade with the US, China is expected to boost spending and global economic growth as factories ramp up production and tourists begin to travel the world again. However, this could lead to higher oil prices and the cost of imports rising, leading to inflation. At the same time, Beijing\’s decision to loosen restrictions could help with the supply shortages that have stoked inflation, potentially offsetting some of the effects of increased Chinese demand. The Fed is also keeping an eye on geopolitical events, such as Russia\’s invasion of Ukraine, which could lead to unexpected shocks in the oil market. As of now, it is too early to tell how the situation will play out, but the Fed is closely monitoring China for signs of an acceleration in the global appetite for goods and services.
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