At the same time, cryptocurrencies continued their decline amid a series of market crashes. On Monday, Celsius Network, an experimental cryptocurrency bank, froze withdrawals, panicking depositors. Bitcoin slumped to its lowest since 2020. By early morning in New York, it fallen 7 percent in the past 24 hours, according to CoinMarketCap.
Investors have been trying to make sense of what’s happening in the global economy.
The World Bank issued a grim warning last week, saying recession will be hard for many countries to avoid. On Monday, the credit rating firm Fitch cut its 2022 forecast for global gross domestic product, or G.D.P., to 2.9 percent, from a March estimate of 3.5 percent. These are just the latest in a series of global economic downgrades as Russia’s protracted war in Ukraine strains already stretched global supply chains, disrupts trade and pushes up the prices of oil, wheat, metals and other essential commodities.
As inflation surges, central banks around the world from Australia to Canada have been moving to raise rates. On Thursday, the Bank of England is expected to raise its benchmark rate for a fifth consecutive meeting. Last week, the European Central Bank said it would raise its rates next month for the first time in more than a decade.
On Tuesday, a German measure of investor confidence rose slightly but still remained deep in negative territory as economic growth faces a considerable number of risks.
“Judging by the meltdown in markets this week, however, as investors face up to the risk of shock and awe from the Fed, and a series of rate hikes in the eurozone,” it’s doubtful the rise in investor confidence “will be sustained,” Claus Vistesen, an economist at Pantheon Macroeconomics, wrote in a note.
With the global economic outlook weakening, traders are questioning how far central banks can go in raising rates to impede inflation without worsening the stress on companies and households.