Fed wants to ‘crater the economy’ to result in demand destruction: Keith Fitz-Gerald
Wilmington Trust chief economist Luke Tilley and Fitz-Gerald Group principal Keith Fitz-Gerald debate how the stock market will perform in Q4 and if the Fed will keep raising rates on ‘The Claman Countdown.’
The Federal Reserve and other major central banks risk triggering a painful global recession followed by a period of stagnation with such aggressive interest rate increases, a United Nations agency warned Monday.
In its annual report on the global economic outlook, the United Nations Conference on Trade and Development (UNCTAD) said the interest rate increases and austerity policies in wealthy nations represented an "imprudent gamble" that risked backfiring, particularly on lower-income nations.
"There’s still time to step back from the edge of recession," UNCTAD Secretary-General Rebeca Grynspan said. "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."
The agency estimated that a percentage point increase in the Fed's benchmark federal funds rate reduces the economic output in other wealthy nations by about 0.5%, and in poor countries by about 0.8% over the next three years. Lower-income nations will already see economic output tumbled by about $360 billion over the next three years as a result of the Fed's rate increases so far this year.