(Brussels) The head of European diplomacy Josep Borrell warned on Monday of “the risk of a global recession” because of the race to raise interest rates launched by the American Federal Reserve, during a intervention in front of EU ambassadors.
Posted at 11:59
“Everyone must follow the rate hikes decided by the Fed, otherwise the currencies will be devalued” against the dollar, he explained. “Everyone is racing to raise interest rates and that will lead us to 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 arm, has hiked rates three times since March and warned that to deal with still too high inflation, another tightening of the screw would be needed.
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 contributed 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 and more difficult and we will no longer have cheap Russian gas,” he said. “The adjustment will be difficult. And that will create political problems.”
“On the other hand, we have delegated our security to the United States. But who knows what will happen in two years? Or even in November? “, he underlined in a reference to the next electoral deadlines in the United States. “We have to take on more responsibility ourselves, we have to take on more of our security responsibility.”
“But we still have a long way to go to be one, one power, acting on behalf of the Union as a whole,” he lamented.