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    Recession: UN asks the Fed to stop its “reckless bet” to raise interest rates

    Recession: UN asks the Fed to stop its “reckless bet” to raise interest rates

    An agency of the United Nations Organization warned of the risk of a global recession caused by the Federal Reserve and other major banks by implementing a more aggressive monetary policy that would have serious consequences for developing countries.

    “An excessive monetary tightening could usher in a period of economic stagnation and instability” for some countries, the United Nations Conference on Trade and Development (UNCTAD) said in a statement released alongside its annual report.

    The entity stated that the interest rate increases and austerity policies in rich nations they represented an “unwise gamble” that risked failure, particularly in low-income nations.

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    “There is still time to move away from the brink of recession,” said UNCTAD Secretary-General Rebeca Grynspan. “We have the tools to calm inflation and support all vulnerable groups. But the current course of action is hurting the most vulnerable, especially in developing countries.”

    The agency estimated that a one percentage point increase in the Fed’s benchmark federal funds rate would reduce economic output in other rich nations by about 0.5% and in poor countries by about 0.8% over the next three years.

    He also pointed out that low-income nations will see their economic output fall by around $360 billion over the next three years as a result of the Federal Reserve’s rate hikes so far this year.

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    “Any belief that they (central banks) will be able to lower prices by relying on higher interest rates without triggering a recession is, the report suggests, a reckless bet“.

    The Federal Reserve has embarked on one of the fastest courses in history to increase borrowing costs and slow the economy.

    Last week, officials approved a third consecutive rate increase of 75 basis pointslifting the fed funds rate to a range of 3.0% to 3.25%, close to restrictive levels, and signaled more large increases are on the way.

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    Economic growth has already contracted in the first two quarters of the yearwith gross domestic product, the broadest measure of goods and services produced in a nation, down 1.6% in the winter and 0.6% in the spring.

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    Source: La Opinion

    Awutar
    Awutar
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