The World Bank Group has warned the Central Bank of Nigeria (CBN), and other central banks across the world on an impending global economic recession that is like to hit the world following simultaneous hike of interest rates.
Meanwhile, the CBN had at the last Monetary Policy Committee (MPC) meeting in July in Abuja raised the benchmark interest rate from 13.5 percent to 14 percent.
In a report tilted: Risk of Global Recession in 2023 Rises Amid Simultaneous Rate Hikes, World Bank Group President David Malpass, posited that central banks’ simultaneous hike of interest rates in response to inflation, will push the world economies toward a global recession in 2023.
The World Bank stated that the decision would also lead to a string of financial crises in emerging market and developing economies that would do them lasting harm, according to a comprehensive new study by the World Bank.
The study relies on insights from previous global recessions to analyze the recent evolution of economic activity and presents scenarios for 2022 to 2024.
The report said central banks around the world have been raising interest rates this year with a degree of synchronicity not seen over the past five decades a trend that is likely to continue well into next year.
“Yet the currently expected trajectory of interest-rate increases and other policy actions may not be sufficient to bring global inflation back down to levels seen before the pandemic. Investors expect central banks to raise global monetary-policy rates to almost four percent through 2023-an increase of more than two percentage points over their 2021 average,” it said.
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