United Nations (UN) Urges Fed to Halt Interest Rate Hikes

• At its next meeting on November 4, the Fed will determine the next interest rate hike.
• Fed’s rate hikes this year will have a negative impact on developing nations.

The United Nations has urged the Federal Reserve and other central banks to halt their interest rate hikes. To counteract growing inflation, banks throughout the globe have raised interest rates, but the agency warns that this might trigger a worldwide economic downturn.

The United Nations Conference on Trade and Development (UNCTAD) calculated that the Fed’s rate hikes this year will have a negative impact on developing nations’ GDP by $360 billion over three years. Therefore, more inflation will cause this figure to climb.

UNCTAD Secretary-General Rebeca Grynspan said:

“There’s still time to step back from the edge of recession. 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, and risks tipping the world into a global recession.”

Global Recession Around the Corner

There have been five prior rate hikes by the Federal Reserve, and a sixth might happen at the next meeting. The move increased the rate from near zero at the beginning of the year to a range of 3% to 3.25%, and the possibility of an increase to 4% by the end of 2022 prompted a warning from the United Nations.

Fed Chair Jerome Powell said:

“We are very aware of what’s going on in other economies around the world, and what that means for us, and vice versa. The forecast that we put together, that our staff puts together and that we put together on our own, always take all of that—try to take all of that into account.”

At its next meeting on November 4, the Fed will determine whether or not to raise interest rates in response to rising inflation. High volatility is normally observed during the meeting in major financial markets including crypto markets.

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