(Brussels) European diplomatic chief Josep Borrell warned on Monday of the “risk of a global recession” due to a race to raise interest rates launched by the American Federal Reserve during an intervention before EU ambassadors.
Posted at 11:59 yesterday
He explained that everyone must comply with the rate hikes set by the Fed, otherwise currencies will depreciate against the dollar. “Everybody is racing to raise interest rates and that will take us into a global recession,” he predicted.
“Everyone follows the Fed and implements the same monetary policy because there is no other way, otherwise capital will flee,” he explained.
The Monetary Policy Committee, the Fed’s decision-making body, has raised rates three times since March and has warned that another tightening of the screw is needed to combat still-high inflation.
Mr Borrell rarely ventures into economics, but his speech to EU ambassadors aimed to analyze the new situation created by the fact that Russia and China have become sources of economic and security problems for the EU.
“Russia and China used to contribute to our economic development, this is no longer the case: this will involve a major restructuring of our economy, because access to China will become more difficult and we will no longer have cheap Russian gas.” He \ he said. “The adjustment will be difficult. And that creates political problems. ”
“On the other hand, we have entrusted our security to the United States. But who knows what will happen in two years? Or even in November? “, he underlined in reference to the next election deadlines in the United States. “We must take more responsibility, we must take more responsibility for our security.”
“But we still have a long way to go, a single force, working on behalf of the entire union,” he lamented.