It’s a widely acknowledged truth that when the United States’ economy sneezes, many countries catch a cold. And so it is with this week’s interest rate hike by the Federal Reserve in Washington, whose efforts to contain inflation in the U.S. are sure to create new problems for already battered economies and families in less affluent countries.
The move will unintentionally pile onto the multiple, interconnected crises and growing challenges already facing developing countries. As I noted a few weeks ago, Russia’s war on Ukraine is sending economic, and therefore political, shockwaves across the planet, from Peru to Sri Lanka. Now comes the Fed, with its plans to snuff out the tide of rising prices that is affecting the U.S., much as the rest of the world.
It all adds up to something of a perfect storm. Years of trade tensions between the world’s major economic blocs, the coronavirus pandemic, a major European war and the recent, draconian Chinese lockdowns have each acted like undersea earthquakes, unleashing waves that, in some cases, have washed ashore as tsunamis.