Global financial crises: challenges and opportunities. A conceptual paper

The present adverse economic conditions, characterized by elevated inflation rates and increases in federal interest rates, can be attributed to a combination of internal and external forces. Consequently, the scarcity of stock and inflation have resulted in a rise in pricing for items. The COVID-19 pandemic has resulted in supply chain disruptions, particularly due to the closure of international borders. This has had a significant impact on the global movement of commodities, affecting not only the United States but also several countries worldwide. The supply chain problem has been intensified by the ongoing conflict between Russia and Ukraine, resulting in the imposition of export restrictions on key food commodities, including grain, originating from Ukraine. Furthermore, this has resulted in a rise in costs for food and other commodities as a consequence of insufficient supply relative to demand, hence exacerbating the issue of hunger. In order to curb rising prices or inflation in the US, the Federal Reserve (the Fed) has increased the rate multiple times in the US (Rodini, 2024). The justification is that by raising rates, the Fed hopes its rate hikes will moderate demand for consumer goods and services by making it more expensive to borrow money. The philosophy is that if goods and services become too pricey, fewer people will buy them, and sellers will have to lower their prices to retain customers. Because of the high rates in the US, other central banks in the world will also need to raise their own interest rates as a precautionary measure to curb inflation and prevent outflows of funds to the US due to the high rates offered to depositors in the US. Thus, by matching rate hikes in their own respective countries, the central banks in those countries intend to prevent the outflow of capital while curbing inflation at the same time. But these rate hikes can also have the opposite effects on businesses and ordinary people in those countries. Rate hikes translate to higher borrowing costs (Sorkin et al., 2023) for ordinary people and businesses who are now in the post-pandemic period, and they need every single financial help, inclusive of lower borrowing costs, to help them revive their businesses that were badly affected by the pandemic. Not to mention, many businesses went bankrupt because they just could not sustain themselves with COVID measures such as lockdown and movement restrictions. On a personal level, the COVID pandemic has made many people lose their jobs, facing disclosures on their mortgages, and many were made homeless by the situation. High borrowing costs are certainly not working in their favor for them to restart their lives.