Beautiful Virgin Islands


Don't raise interest rates, UN warns the Federal Reserve and other central banks

Don't raise interest rates, UN warns the Federal Reserve and other central banks

The UK economy is forecast to contract 0.9% in 2023, the UN agency said, amid "a series of headwinds" resulting from Brexit and international conditions.

The UN has called on central banks not to increase interest rates and depart from the monetary policy being pursued by a large number of western regulators, including the Bank of England.

A recession worse than that experienced after the global financial crisis could result from monetary regulators tightening policy and hiking interest rates, the United Nations Conference on Trade and Development (UNCTAD) has warned.

The Trade and Development Report 2022, published by UNCTAD on Monday, expressed "worries that an unduly rapid tightening of monetary policy in advanced economies in combination with inadequate multilateral support could turn a slowdown in to recession".

That would trigger "vicious economic circles in the developing world with the damage more lasting than after the global financial crisis or Covid shock", the body said.

The actions of the American central bank, the Federal Reserve, known as the Fed, were specifically addressed by the report for hurting growth: "This year's interest rate hikes in the United States are set to cut an estimated $360 billion of future income for developing countries (excluding China) and signal even more trouble ahead".

Instead of increasing interest rates to fight inflation, policy makers should put in place price caps funded by one-off taxes on unusually large profits being made by energy companies, lead author Richard Kozul-Wright told the Wall Street Journal.

Late last month the Fed, similar to the Bank of England, said it was committed to reducing inflation to 2% by increasing interest rates to 4.4% by the end of 2022 and 4.6% in 2023. Higher interest rates mean paying back debts such as mortgages and credit card repayments becomes more expensive.

The Bank of England also raised interest rates in the UK to 2.25%, the highest level since 2008. It's expected this rate will rise to 6% even higher than has been announced.

Overall the world economy is expected to grow 2.5% this year according to the UNCTAD report, down more than 1% from the growth projected in the same report for 2021. This is only to get worse, it said, as growth is expected to decelerate again next year to 2.2%, leaving real gross domestic product (GDP) - a measure of the market value of goods and services produced - below its pre-Covid trend by the end of 2023.

The economy of the UK was "grew rapidly" in 2021 by 7.4%, the report said. But this still did not compensate for the contraction of 9.3% due to Covid-19. The growth momentum continued into the first quarter of this year but "a series of headwinds, some resulting from Brexit and others from international conditions, are impacting the outlook".

"External adversities stemming from sluggish global demand, exchange rate instability and yet unresolved Brexit
shortcomings are contributing to current account challenges."

This, combined with the cost of living crisis which has weakened consumer demand, will result in the economy contracting 0.9% next year, the UNCTAD said.

Comments

Oh ya 2 year ago
If the UK Government had not stepped in a couple of days ago with buckets of money the pension funds would have imploded. They had a emergency meeting today about the banking industry. If it had exploded it would have made Leman and Bear S look pale. As nowadays the banks are interconnected. The EU banks are likely to crash first at which time you might have 2 days to get your money out of western banks before they crash also. And remember folks the laws were changed so the government does not do bailouts any more the banks have bailins, the banks clean out your money and give you shares in there bankrupt bank

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Postal Workers Demand Government Probe Into Royal Mail 'Fake Deliveries' Scandal
Explosion Sinks Russian Cargo Ship Ursa Major in Mediterranean
Mystery Shrouds U.S. Citizen Gene Spector's 15-Year Espionage Sentence in Moscow
Zelenskyy Alleges 3,000 North Korean Casualties in Russian Conflict
North Korea's Unseen Hand: Over 1,000 Troops Suffer Casualties in Ukraine
Discovery of 50,000-Year-Old Baby Mammoth in Siberia Fascinates Scientists
Magdeburg Attack Fuels AfD's Political Momentum Amid Rising Tensions
In Magdeburg, Germany, a man is arrested by the police for declaring, "I am a Christian."
UK News Roundup: London Shooting, Travel Disruptions, and Legal Battles
UK Economy Teeters on Recession's Edge Amid Revised Growth Figures
Australian Man Captured in Ukraine Conflict; Government Seeks Answers
Zelenskyy’s Push for NATO: A High-Stakes Gamble for Eastern European Stability
Slovak Pragmatism or EU Discord: Prime Minister Fico’s Polarizing Moscow Engagement
The Ripple Effects of a Russian Victory in Ukraine: A Global Tectonic Shift
U.S. Government Shutdown Averted by Last-Minute Agreement
Tragedy in Magdeburg: Saudi Doctor's Alleged Terror Attack at German Christmas Market Ignites Global Security Debate
Tragedy Strikes at Magdeburg Christmas Market: Terror Attack Leaves Five Dead
Texas Congresswoman Kay Granger Discovered in Nursing Home Following Six Months of Inaction
Prince William to End Feudal Land Restrictions in Duchy of Cornwall, but Controversies Remain
British police appear unprepared to deal with usual suspects
Russia's Ballistic Blitz on Kyiv Sends Shockwaves Through Global Stability
Multiple Tragedies and Tensions Mark Global Events: A Closer Look
Elon Musk's AfD Endorsement Ignites Controversy from neo-Nazis who accuse the AfD of being what they themselves are
Ukraine Claims Unprecedented Russian Losses: The Truth Behind Wartime Statistics
Federal Reserve Chair Powell: "We are prohibited from owning Bitcoin and are not seeking any changes to that law."
A Democratic congresswoman with blue and black hair is having a meltdown over "President Musk."
A sizable group of unauthorized migrants is traveling through Mexico with the aim of reaching the USA before Trump assumes office.
Beatles Reunion Electrifies London: Paul McCartney and Ringo Starr Ignite O2 Arena with Surprise Performance
Starmer's Envoy Engages Trump Team as UK Seeks Strategic U.S. Partnership
Britain's Retail Rebound Falters as Black Friday Splurge Dissipates
Bank of Japan's Bold Reckoning: A Decade of Unconventional Policy Under Scrutiny
Republican Discord Threatens Government Shutdown Amid Holiday Season
French Retiree Dominique Pellico Convicted for Recruiting 72 Men to Assault Wife Over a Decade
Putin Defends War Strategy as Global Tensions Rise
Putin Claims Progress as Tensions Rise: Conflict in Ukraine Intensifies
Putin's Paradox: Claiming Strength Amidst Sanctions and Isolation
Water as a Weapon: The Contentious Struggle for Survival in Gaza
Syria's Future: A Fight for Democracy or Another Cycle of Oppression?
UK Considers Sending Troops to Ukraine: A Strategic Move or Intensifying The Proxy War?
Renewed ISIS Threat Puts Syria’s Cultural Heritage in Peril
Escalation in Moscow: High-Profile Assassination and International Tensions Intensify
North Korean Troops in Ukraine: A New Cold War Frontier?
Ukraine's Bold Move: High-Stakes Assassination of Russian General in Moscow
Dubai's Technological Leap: Brain Chips and AI Board Members by 2025
Tragedy Strikes Wisconsin School as Shooting Claims Lives of Teacher and Student
UK's Calculated Gamble: Balancing Defense Aid to Ukraine and Domestic Demands
UK Intensifies Stranglehold on Russian Oil, but Does It Dampen Putin’s Resolve?
British Voter Endorsement of Reeves's Bold Tax Strategy
Nicola Sturgeon Warns of 'Toxic' Discourse: The Perils of Polarisation in Modern Politics
Levelling Down: How the Conservatives Underspent on Regional Revitalization
×