The Federal Reserve’s aggressive tightening policy has led the US dollar to appreciate to multi-decade highs, squashing currencies around the world. Now, a United Nations agency is warning that its actions, along with those of other central banks, risk pushing the global economy into recession. What’s happening: In a new report, the United Nations Conference on Trade Development (UNCTAD) said that tightening monetary policy, meant to fight inflation, could inflict worse damage globally than the financial crisis in 2008 and the Covid-19 shock in 2020. The agency estimated in its report that each percentage-point increase in the Fed’s push to hike interest rates would lower the economic output of other rich countries by 0.5% and the economic output in less developed countries by 0.8% over three years. That’s because a strong dollar makes it more expensive for other countries to import essential items like food and fuel. An elevated greenback especially crushes poorer countries that must meet their debt obligations in dollars. US interest rate increases this year alone could cut $360 billion of future income for developing countries by driving up the value of the US dollar, the UN report found. The UN agency called the Fed’s actions an “imprudent gamble” with the lives of those less fortunate. If central banks don’t “course correct,” the UN agency said, emerging countries could tumble into a series of debt crises and health and climate emergencies. A growing consensus: The UN agency joins a growing chorus of organizations expressing worry about the global economic climate. World Bank President David Malpass last week warned that a “perfect storm” of stagflation and global recession could reverse years of economic development. World Trade Organization Director-General Ngozi Okonjo-Iweala also said last week that the world was “edging” into recession. The International Monetary Fund recently downgraded its economic projections for 2023 and India’s central bank said on Friday that the global economy was experiencing a shock because of monetary policy. An alternative to rate hikes: There’s more than one way to lower inflation rates, argued UNCTAD Secretary-General Rebeca Grynspan. For instance, countries could implement a windfall tax — a one-time levy on an industry that has experienced unusually high profits — on oil and gas companies. “There’s still time to step back from the edge of recession,” she said. EU governments have already agreed to tax the windfall profits of oil and gas companies, but it’s exceedingly unlikely that the US Congress will approve any new taxes ahead of the midterm elections in November. The bottom line: The UN report probably won’t change the minds of central bankers. Federal Reserve Vice Chair Lael Brainard said last week that while a higher US dollar exerts inflationary pressures around the globe, retreating from the inflation fight prematurely would have worse ramifications. Central banks and economists believe that, “If left unchecked, these inflationary pressures could prove hugely destructive to global growth and welfare,” Robert Khan, chief economist of Eurasia Group, told me. Credit Suisse stress shows investors are on edge Shares of Credit Suisse plunged to a fresh record low on Monday, before recovering, as jittery investors trained their attention on the Swiss bank, reports my colleague Julia Horowitz. The cost of insuring Credit Suisse debt against default, as measured by credit-default swaps, also shot up, fueling concerns about the bank’s ability to stay afloat. The lender has been plagued by a series of scandals and regulatory failings in recent years that cost it billions and led to an overhaul of top management. But it’s facing renewed scrutiny following a memo to employees from CEO Ulrich Körner sent Friday that was shared with CNN Business. Körner sought to reassure colleagues about the bank’s financial health before he unveils a restructuring plan at the end of this month. “I know it’s not easy to remain focused amid the many stories you read in the media — in particular, given the many factually inaccurate statements being made,” wrote Körner. “That said, I trust that you are not confusing our day-to-day stock price performance with the strong capital base and liquidity position of the bank.” The bank has emphasized that it remains on solid ground. But if clients get anxious and start to pull their money, it can create a damaging feedback loop. There’s also fear that the downfall of one major bank could spread, just as the September 2008 collapse of Lehman Brothers precipitated the global financial crisis. Citigroup analyst Keith Horowitz wrote in a note that he had received inquiries about the “contagion impact” on US banks, but said that he did not see any cause for concern. “We believe the US bank stocks are very attractive here,” Horowitz said. US banks hold significantly more capital than they did at the time of the Lehman collapse, he said. “We understand the nature of the concerns, but the current situation is night and day from 2007.” UK government makes a U-turn on tax cuts The British government is reversing plans to scrap the highest rate of income tax, announcing the embarrassing retreat after a rebellion among its own lawmakers and a week of financial and economic turmoil, report my colleagues Mark Thompson and Adam Renton. In a statement on Monday, finance minister Kwasi Kwarteng said the tax cut for people earning more than £150,000 ($170,000) “had become a distraction” from the government’s wider package of measures to tackle the energy crisis and to reduce taxes more broadly, in its efforts to end years of economic torpor. “We get it, and we have listened,” he said. The announcement marks a major and abrupt backtrack for new Prime Minister Liz Truss, whose government has been roiled by the reaction to its proposal for sweeping tax cuts, which included slashing the top rate of income tax to 40% from 45%. The cuts sent the pound plunging to historic lows against the US dollar, and sparked chaos in the market for UK debt because they will require a large increase in government borrowing. Mortgage rates soared, and some pension funds struggled to remain solvent. A degree of order was only restored by an emergency intervention last Wednesday by the Bank of England, which said it would buy UK government bonds worth £65 billion ($73 billion). Up next The Bureau of Labor Statistics releases US job openings and labor turnover (JOLTS) at 10 a.m. ET. Coming tomorrow: OPEC+ meets to discuss energy markets and could agree to cut production because of the recent fall in oil prices. OPEC is responsible for nearly 40% of the world’s oil supply.