A continuous increase in interest rates will lead America into recession

- Confusion of economics: Dhawal Mehta

Not only in Britain but also in America, the high rate of inflation has disturbed people. The central bank there (Federal Reserve System) has taken more stringent measures. And if the bank raises the rate again, there is a possibility that America will fall into recession. America is currently in an economic slowdown but not a recession. The Ukraine-Russia conflict has caused economic damage not only to these two countries but to all peoples and governments living in the world. As many countries of the European Union depend on Russian oil and gas, they and especially Germany are likely to suffer more. If Russia does not provide sufficient gas and oil supplies to Germany in time, millions of German citizens will die in the cold from the beginning of winter due to lack of fuel. Can Russia be held responsible not only for the direct damage caused by its invasion of Ukraine but also for the indirect damage caused to the countries of the world? The ongoing conflict between the two has led to price hikes in all countries of the world. In Russia itself, inflation has gone so high that Putin would have to flee the country, like the Sri Lankan president, if there were no authoritarian government. As the war called Viet goes on for years, if this war is prolonged too much, the economy of many countries in the world, including India, will be trapped in depression. Humankind has barely recovered from the black hole of Kovid-2, then the horror of the Ukraine-Russia war came upon the world, and now the world is going crazy. Of course, the Indian economy has maintained its 'resilience' during the conflict between these two countries.

And India's economic growth rate has been higher than India's inflation rate. According to an estimate, India's current inflation rate is around 6.6 percent. At present, India's economic growth rate for 2022-23 is estimated at 7.2 percent. In a recession, prices fall, factories cannot sell goods even at low prices, unemployment rises enormously, demand declines, production declines, and national income declines and becomes negative. This is called classical recession.

Economists do not believe that the current economic crisis in the world is only for a short time. Due to the fact that the central banks of the world have been continuously increasing the bank rates, there is now a fear that the economic growth rate of the countries of the world will decrease due to the decrease in liquidity from the economy. Also, it is natural that the beginning of recession in America will affect the economy of the whole world like Kovid-2. The US is alarmed by its inflation rate of nearly nine percent as the average annual growth rate of goods prices in the US during the last two decades from 2000 to 2019 was only 4 percent. (less than half a percent) and the average price increase in the service sector was only 2.6 percent during the same period. Food and petrol price hikes are excluded in this calculation. Because its prices fluctuate a lot.

In America, the price increase of 2.6 percent in the last twenty years is called 'Core Inflation Rate'. In today's world supply-chain is broken so prices will go up. 'Supply-pull' inflation may be more alarming than 'demand-pull'. Many will be surprised to know that the bank rate from America was close to zero in the period from 2008 to 2015. America has set its inflation target at only two percent. India's maximum is plus 4 percent and minus two percent.