World Bank Warns of Global Recession Next Year if Central Banks Lift Interest Rates Too High

Central banks’ efforts to tame inflation could tip the world economy into recession next year, according to a new World Bank study that encouraged policy makers in major economies to keep in mind the spillover effects of monetary tightening.

Central banks around the world have been rapidly raising interest rates this year in an effort to reduce the highest inflation in decades. In the U.S., the Federal Reserve is on track to lift interest rates by at least 0.75 percentage point at its meeting next week, while central banks in England, Canada and the European Union have all also raised rates recently.