Central banks in Western countries are actively raising interest rates in an attempt to reduce inflation, but with the fall in prices comes the collapse of government bonds. Bloomberg reported this on September 24, citing data from experts from Bank of America.
“Government bond markets are on the verge of the worst performance since 1949, when Europe was recovering from the Second World War,” the material notes.
As specified, the growing losses reflect how far the US Federal Reserve System (FRS) has gone, as well as the central banks of other Western countries. They stopped keeping the base interest rate at zero to support the economy, as they did during the coronavirus pandemic.
According to experts, this had a negative impact on prices, including the cost of shares and fuel. Investors are now bracing for a slowdown in economic growth.
The agency notes that next week the Western market may face new problems after the meeting of the US Federal Reserve, which announced an increase in its base interest rate to 3-3.25% per annum. Since May of this year, the increase was the third in a row in an attempt to curb inflation.
Earlier, on September 20, the former speaker of the lower house of the US Congress, Republican Newt Gingrich, in an article for The Washington Times, said that the US leadership is out of touch with reality and does not realize that the “Inflation Reduction Act”, signed by US President Joe Biden in August, only increased government spending, exacerbating the economic situation.
Back in July, New York City Mayor Eric Adams said at an event in Staten Island that a major financial crisis was coming in the United States. At the same time, the day before, Joe Biden noted that the US economy is on the right track, and its slowdown can be explained by last year’s historical economic growth.