White House’s Brian Deese Doesn’t Expect Another Plaza Accord Coming
White House National Economic Council Director Brian Deese said he didn’t expect another 1985-type agreement among major economies to counter the dollar’s strength.
“I don’t anticipate that that’s where we’re headed,” Deese said at an event at the Economic Club of Washington, DC when asked whether there was any possibility of a global agreement to adjust currency values, as was reached in 1985.
Deese’s rejection of a new version of the Plaza Accord, as the 1985 deal was known, came hours after Treasury Secretary Janet Yellen suggested there was little cause for concern with current moves in financial markets.
“I think markets are functioning well,” Yellen told reporters during a visit to North Carolina Tuesday. “The overall environment is one of high inflation in many advanced economies.
Central banks are addressing it in almost all countries — other than China — but operating at different speeds and different paces.”
The Bloomberg Dollar Spot Index has surged almost 16% this year, and reached a record high Tuesday, propelled by the most aggressive trajectory of interest-rate hikes by the Federal Reserve since the 1980s.
Markets reflect expectations for the Fed to keep boosting rates, Deese noted.
UK, Europe
For his part, Fed Chair Jerome Powell, when asked last week about coordination among global central banks, said, “We regularly discuss what we’re seeing in terms of our own economy and international spillovers” with counterparts. “It’s hard to talk about collaboration in a world where people have very different levels of interest rates,” he said in his Sept. 21 press conference.
Europe also faces challenges, he said. Both the UK and Europe have a “very difficult” situation, with a tough period ahead in coming months, Deese said.
Deese said he wasn’t surprised at the market reaction to the new economic program from UK Prime Minister Liz Truss’s government. The pound has crashed to record lows against the dollar, and UK government bond yields have jumped to the highest in two decades.
As for the US, the White House economic director said that “the most striking feature of the US economy right now is resilience: the resilience of households and consumer balance sheets, resilience of business and business investment, and, globally, the resilience of the US economy in an uncertain global environment.”
Asked whether he plans to stay on in his current role for the next two years of the administration, Deese said, “I’ve got no plans to leave and I’ve got my head down and certainly fully, fully absorbed in what we’re doing.”
