The big impact of the Fed rate hike will be visible on the US stock market as it will continue to decline. India’s IT companies will be most affected by the fall in the stock market there. Trading of these companies will be less, due to which the profits of the companies will be hit hard.
Fed Reserve Chairman Jerome Powell
Fed reserve rate hike: US central bank federal Reserve raised interest rates on Wednesday. 0.75 percent in one stroke increase of interest done. rising Dearness Federal Bank took this step to control. This is the fourth time that interest rates have been increased continuously. However, the central bank says that in the coming time these rates will be reduced and inflation will also come down. With this, the rate of short-term loans has increased from 3.75 percent to 4 percent, which is the highest level in the last 15 years.
Wednesday’s hike in interest rates is the sixth time in a year. Due to this increase, all types of loans in America have become very expensive. This is hurting the growth rate, which has created the possibility of recession. However, in a statement, the Fed Reserve has said that it will soon find a solution and interest rates can be cut. After considering the effect of the increase in interest rates on the economy, any next step will be taken soon by the Fed. This includes the decision to cut rates. The Fed has acknowledged that increasing interest rates is having an impact on growth and inflation.
What will the US Fed do next?
Policy makers of the Fed Reserve believe that due to the increase in interest rates, loans have become expensive, due to which people are taking less loans. This has reduced the expenditure of the people, due to which the inflation is coming down. If inflation is low, the Fed will not have to raise interest rates at the same pace as it has raised before. If inflation comes under control, it is also possible to cut interest rates. However, this reduction does not seem to be happening so soon.
People’s jobs are being lost due to costly loans, increase in inflation and decrease in growth rate. The cost of American households has increased much more than before. On the other hand, the US Fed Reserve is continuously raising interest rates to reduce inflation. After Wednesday’s hike, there is a possibility that there will be a meeting on the policy rate in December also and there may be a discussion on increasing the rates. However, there will be no increase of 75 basis points in December and is likely to see an increase of 0.50 per cent.
What will be the effect on India
The effect of the increase in the rates of the Fed Reserve is seen all over the world. If American debt becomes expensive, then the debt or expenses of the countries dependent on it will also be expensive. The rates of goods ordered from there will also increase. The earnings of Indian people living in America will decrease and the amount of money they send to India will decrease. The increased expenditure in America will be reflected on the remittances coming to India.
The next big impact will be seen on the US stock market as it will continue to decline. India’s IT companies will be most affected by the fall in the stock market there. Trading of these companies will be less, due to which the profits of the companies will be hit hard. The effect of the increase in interest rates will be seen on the world’s currency. Right now the US dollar remains strong and its strength is increasing further due to increase in interest. On the other hand, there is a continuous decline in the Indian rupee. The bad effect of rupee depreciation can be seen on the development and GDP of the country.
English News headline: The Federal Reserve raises its benchmark interest rate by three-quarters of a point for a fourth straight time
: Language Inputs