World Bank Warns That Rate Increases Could Lead To A Recession.

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Nigeria and other developing nations have been cautioned by the World Bank Group that raising interest rates simultaneously in response to rising inflationary pressure could result in a worldwide recession and a series of financial crises.

The Washington-based bank warned that the currently anticipated trajectory of interest-rate increases; and other policy actions might not be enough to bring global inflation back down to levels seen before the pandemic in its latest study, “Risk of Global Recession in 2023 Rises Amid Simultaneous Rate Hikes.”
According to the report, central banks have been rising interest rates this year; with a degree of coherence not seen in the previous fifty years. This trend is to last well into next year.

Investors anticipate that central banks will boost their average worldwide interest rates by more than two percentage points; from their 2021 average through 2023, to almost 4%.

If financial market stress was present at the same time, global GDP growth would fall to 0. 5% in 2023, a per-capita contraction of 0.4% that would technically qualify as a global recession.

Punch.

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