Overseas Network July 27th According to a report by Sputnik news agency & radio on the 27th, the Federal Reserve announced on the 26th that it would raise interest rates by 25 basis points again, raising the target range of the federal funds rate to 5.25% to 5.5%, reaching the highest level in 22 years. Sergio Rossi, a professor of macroeconomics and monetary economics at the University of Fribourg in Switzerland, said that the Fed’s decision will lead to a "serious recession" in the United States in the near future.
Rossi said that it is not surprising that the Fed will raise interest rates again, because the United States has not yet reached the annual inflation target of 2%, but at a time when the number of non-performing loans of financial institutions is increasing, resulting in a record high debt, raising interest rates "will have a negative impact on the United States and the global economy". Rossi criticized that raising the federal funds rate to 5.25%-5.5% will push up inflation, not curb it. Rossi analyzed that due to the higher interest rate of bank loans, more and more small and medium-sized enterprises will raise the prices of goods and services, while higher interest rates will lead to a large reduction in consumer loans, thus inhibiting economic growth.
The decision to raise interest rates will further lead to the appreciation of the dollar in the foreign exchange market and have a negative impact on US exports. Rossi said that all these factors will reduce the investment level of enterprises in the US economy, and further have a negative impact on the employment and salary of middle-class workers in the United States, resulting in lower consumption levels of middle-class groups. More seriously, it may lead to a "vicious" cycle, push the United States into a "serious recession" and will inevitably spread to other western economies suffering from inflation. (Overseas network Hou Xingchuan)