Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

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.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
Wave of Complaints Against Apple Over iPhone 17 Pro’s Scratch Sensitivity
Munich Airport Reopens After Second Drone Shutdown
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
The Personality Rights Challenge in India’s AI Era
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Study Finds No Safe Level of Alcohol for Dementia Risk
Trump Says Ukraine Can Fully Restore Borders with NATO Backing
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
×