Caution should not be lost when it comes to tightening fiscal and monetary policies because this could trigger a global recession, according to to a UN agency report.

The Trade and Development Report 2022 of the United Nations Conference on Trade and Development (UNCTAD) highlighted:

“The world is headed for a global recession and prolonged stagnation unless we quickly change the current course of monetary and fiscal policy in advanced economies.”

the Federal Reserve (Fed) has been getting the ball rolling in terms of interest rate hikes, which have been detrimental to the crypto market as bears continue to bite.

Since June of this year, the Fed has adopted the strategy of raising interest rates by 75 basis points (bp), a scenario last seen in 1994.

Market analyst Michael van de Poppe recently he pointed that the situation had become dire to the extent that the crypto market is biased positively towards decisions made at federal open market committee (FOMC) meetings.

Sam Bankman-Fried, CEO of crypto exchange FTX, also indicated that even though the Fed was stuck between a rock and a hard place, it was driving the current cryptocurrency downturn because both markets and people were scared.

Therefore, the rising trend in interest rates has UNCTAD concerned, as tighter macroeconomic conditions affect the most vulnerable. According to the report:

“All regions will be affected, but the alarm bells sound loudest for developing countries, many of which are nearing debt default.”

UNCTAD argued that sharply raising interest rates would make life harder for heavily indebted governments, households and businesses. In addition, the growth would be completely reduced.

“There is still time to step back from the brink of recession. The current course of action is hurting the most vulnerable. This is a question of political choice and political will,” added UNCTAD Secretary-General Rebeca Grynspan.

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