Saudi Press

Saudi Arabia and the world
Saturday, Jun 21, 2025

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.

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
G7 Leaders Fail to Reach Consensus on Key Global Issues
Mass exodus in Tehran as millions try to flee following Trump’s evacuation order
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Netanyahu Signals Potential Regime Change in Iran
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
Iran Conducts Ballistic Missile Launches Amid Heightened Tensions with Israel
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
Shock Within Iran’s Leadership: Khamenei’s Failed Plan to Launch 1,000 Missiles Against Israel
Trump's Anti-War Stance Tested Amid Israel-Iran Conflict
UK Deploys Jets to Middle East Amid Rising Tensions
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
Wreck of $17 Billion San José Galleon Identified Off Colombia After 300 Years
Iran Launches Extensive Missile Attack on Israel Following Israeli Strikes on Nuclear Sites
Israel Issues Ultimatum to Iran Over Potential Retaliation and Nuclear Facilities
Black Box Recovered from Air India Crash Site
Coinbase CEO Warns Bitcoin Could Supplant US Dollar Amid Mounting National Debt
Trump to Iran: Make a Deal — Sign or Die
Operation "Like a Lion": Israel Strikes Iran in Unprecedented Offensive
Israel Launches 'Operation Rising Lion' Targeting Iranian Nuclear and Military Sites
Israeli Forces Intercept Gaza-Bound Aid Vessel Carrying Greta Thunberg
IMF Warns of Severe Global Trade War Impacts on Emerging Markets
Syria to Reconnect to Global Economy After 14 Years of Isolation
Israel Confirms Arming Gaza Clan to Counter Hamas Influence
Global News Roundup: From Ukraine's strategic military strikes and Russia's demands and Tensions Escalate in Ukraine, to serious legal issues faced by Britons in Bali and Trump's media criticism, the latest developments highlight a turbulent landscape
U.S. Reduces Military Presence in Syria
Trump Demands Iran End All Uranium Enrichment in Nuclear Talks
Iran Warns Europe Against Politicizing UN Nuclear Report
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
×