Fed Rate Hike Impact On Stock Market

Fed Rate Hike Impact On Stock Market

Fed Rate Hike Impact On Stock Market, Fed Rate Hike Impact On Stock Market today, Fed Rate Hike Impact On Stock Market future.

Fed Rate Hike Impact On Stock Market

The US Federal Reserve has increased interest rates to control rising inflation in the US. The US Federal Reserve has raised interest rates by 75 basis points, or 0.75 percent.

Fed Rate Hike Impact On Stock Market

Fed Rate Hikes Announcement 2022

Fed  Rate Hike: The US Federal Reserve has increased interest rates to control rising inflation in the US. The US Federal Reserve has raised interest rates by 75 basis points, or 0.75 percent. This news may also shock the Indian market. Indian currency rupee may go down further.

Biggest fed rate hike in interest rates since 1994

The rates raised by the US Federal Reserve yesterday are the biggest increase in interest rates since 1994. After this news, there can be a strong movement in the global markets. The Fed has taken this decision in view of the wildly rising inflation rate in America. Consumer price inflation in the US has reached its highest level since 1981 and stood at 8.6 per cent. This increase in inflation has been seen in America due to increase in food and energy prices.

Fed Rate Hikes 2022-Fed had already indicated

Fed officials have indicated further increase in interest rates. The indication of increase in the interest rates of people to take loans was already given and on the same lines this increase in interest rate has been done. The Fed has also said that it will keep an eye on the impact of this rate hike on the US stock market.Fed Rate Hike Impact On Stock Market.

The pace of economy may slow down in America

The US central bank has made it clear by increasing interest rates by 0.75 percent that it is committed to bring the rising inflation rates down here. In its statement to increase the rates, the central bank clearly said that it will take strict steps to bring the inflation rate to 2 percent. The Fed also highlighted that the economy may slow down in the coming days in America, not only that, the country’s unemployment rate can also see a further increase.

Fed Rate Hikes- How will it affect the Indian markets?

The increase in rates of the US Federal Reserve is expected to have a bad effect on the Indian markets as well and the biggest reason for this is that the rupee may fall against the dollar. After the Fed raises rates, a big increase in the dollar rate can be seen and the fall of the rupee can deepen. Not only this, India’s central bank Reserve Bank of India may also be under pressure to increase policy interest rates.

Fed Rate Hikes-There will be a shock again in July

Powell has said that with this step retail inflation will be controlled to some extent, but to get complete relief, it will have to increase again in July. He estimated that there could be an increase from 0.50 percent to 0.75 percent next month. Earlier in May also, the Fed Reserve increased the interest rate by 0.50 percent.

Fed Rate Hikes-Powell surprised by his own decision

After the Fed Reserve meeting, Powell said, I myself had no idea of ​​such a big increase. The members involved in the meeting are confident that after increasing the interest rates, consumer inflation will be brought back to 2 percent. Last week, retail inflation in the US was estimated at 5.4 per cent, the highest since 1981.

Fed Rate Hike Impact On Stock Market

Most economists say that due to such a high increase in interest rates, the growth rate of the US economy will slow down. He estimated that America’s growth rate could decline to 1.7 percent this year, which was estimated at 2.8 percent in March. Unemployment is also expected to increase with the growth rate, which may reach 4.1 percent this year. However, by the end of the year 2024, it is expected to come down to 3.6 per cent.

Fed Rate Hike Impact On Stock Market

There is a saying in the business world that even if America sneezes, the world catches a cold. Stock markets around the world are in a downtrend due to the forecast of a hike in interest rates even before the meeting of the US Fed. The Bombay Stock Exchange (BSE) index Sensex also closed down 1457 points on Monday. In fact, due to low interest rates in America, investors like India can take loans from there to get good returns.

Fed Rate Hike Impact On Stock Market

Invest in emerging markets. Which is called carry trade. When interest rates remain low in the US, there is a huge flow of money into emerging markets in the form of FPI investments. This strengthens the stock markets. We have been seeing for the past several months that foreign investors are continuously selling from the Indian markets and inflows are decreasing. Higher interest rates reduce returns for foreign investors and they look to other investment options such as the dollar.

Fed Rate Hike Impact On Stock Market

When the prime interest rate rises in America, countries around the world start increasing their prime interest rates as well. In India too, the RBI started increasing the repo rate when there was a strong expectation of a hike in interest rates by the US. In fact, what happens is that the gap between US and Indian government bonds narrows as interest rates rise in the US. Due to this gap, global investors start withdrawing money from Indian securities. There should be no withdrawal of FPIs from the Indian bond market.