The Federal Reserve is leading a worldwide rush of central bank rate rises that risks tipping the world into a recession, the EU’s top diplomat said, as he warned the union is not fighting its corner in the world.
Josep Borrell, the high representative of the 27-member bloc, said central banks were being forced to follow the Fed’s multiple rate rises to prevent their currencies from slumping against the dollar — comparing the US central bank’s influence to Germany’s dominance of European monetary policy before the creation of the euro.
“Everybody has to follow, because otherwise their currency will be [devalued],” Borrell said to an audience of EU ambassadors. “Everybody is running to increase interest rates, this will bring us to a world recession.”