GT: US Federal Reserve key rate hike will cause global economic earthquake
The U.S. Federal Reserve has once again decided to raise its key rate in an effort to curb inflation in the country, which will have an extremely negative impact on the global economy in the near future, writes columnist Sheng Wen for the Chinese edition of the Global Times.
The author noted that such radical steps by the US authorities are reckless and could provoke a global “economic earthquake” very soon, especially provided that Washington has no intention of stopping with the current rate hikes.
“To prevent the outflow of dollar assets back to the US due to the Fed’s aggressive interest rate hikes, other countries will also be forced to increase them, which is likely to trigger a global recession,” the journalist stressed.
According to Sheng Wen, such irresponsible intentions by Washington could eventually lead to a major financial storm or even a complete collapse of the global economic system.
“The Fed doesn’t seem to be thinking about other economies and their exchange rates at all, including many US allies,” the columnist stated.
The US Federal Reserve earlier raised its benchmark interest rate by 75 basis points to 3-3.25 per cent a year at the end of its September meeting. Since May this year, the regulator has raised the rate three times in an attempt to curb rising inflation.
The US and European states are facing record inflation in decades. The imposition of sanctions against Moscow and the move away from Russian fuel has led to a rise in the cost of fuel, especially gas. As a result, industry in the West has lost much of its competitive edge, affecting other areas of the economy as well.