The Risk of Competitive Interest-Rate Hikes
Uncoordinated interest-rate hikes in the US and elsewhere have significantly increased the risk of a global recession. Fortunately, low inflation rates in China and Japan present policymakers with a narrow window of opportunity to overcome their mutual mistrust and coordinate their monetary policies.
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NEW YORK – The world is facing the risk that major central banks will undertake competitive interest-rate hikes that may look desirable for their countries individually but could drag the world economy into an unnecessary recession. This scenario can still be avoided, but the window of opportunity is closing.