US Federal Reserve increases 0.25% in Fed Rate, tomorrow Indian Stock Market will be engaged
Fed Rate Hike: Once again the US Federal Reserve has raised the Fed rate by 25 basis points on Wednesday। It will also affect the Indian stock market.
US Federal Reserve hiked Fed Rate: The US Federal Reserve on Wednesday raised the Fed rate to 25 basis points। Since this announcement, the interest rate will now increase from 4.75% to 5। Experts were predicting that the Fed rate would rise despite the recent bankruptcy of two banks in the US to overcome inflation। In the past year, the US Federal Reserve has been raising interest rates almost every other month। This affects the bond yield in the US। It is directly losing on the banks there, who do most of their business in the bond itself। It will also affect the Indian stock market। Now it will be quite interesting to see how low the stock market goes on Thursday.
186 banks standing in line with drowning
America, the world’s strongest economy, is currently struggling with a severe banking crisis। The crisis that began with Silicon Valley Bank of America has so far eased three banks। According to the latest report, 186 US banks have stood in this queue। The recent sinking bank in the US is considering a huge increase in interest rates behind this situation in Silicon Valley and Signature Bank। The US has increased interest rates by 4.5 per cent since March 2022। Major interest rate increases yields on securities such as government bonds। As yields increase, the market value of old securities decreases। US banks have invested a significant portion of their assets in securities such as bonds and treasury notes। These bonds were then purchased,When interest rates were quite low। The market value of the securities issued fell significantly before interest rates rose drastically। This has caused huge losses to banks.
Tomorrow can also see the effect on the Indian market
As the Fed rate increases, foreign investors start withdrawing money from the Indian stock market and investing in the US market। This causes the Indian Stock Exchange to decline। In such a situation, it is expected that when the market opens tomorrow, it will have an effect in the stock market। This also puts pressure on the Indirectly Reserve Bank to increase the repo rate। If the Reserve Bank decides to increase the rate, it will directly affect the general public of the country.
Fed Rate Hike
A Fed rate hike refers to an increase in the federal funds rate, which is the interest rate at which banks and other depository institutions lend money to each other overnight. The Federal Reserve, also known as the “Fed,” sets this rate as a way to influence the economy.
When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, which can lead to higher interest rates for consumers and businesses. This can slow down economic growth by reducing borrowing and spending.
On the other hand, when the Fed lowers the federal funds rate, it becomes cheaper for banks to borrow money, which can lead to lower interest rates for consumers and businesses. This can stimulate economic growth by encouraging borrowing and spending.
The decision to raise or lower the federal funds rate is made by the Federal Open Market Committee (FOMC), which is the Fed’s policy-making body. The FOMC meets several times a year to review economic data and make decisions about monetary policy.
Overall, a Fed rate hike can have significant impacts on the economy and financial markets, and it is closely watched by investors, policymakers, and economists.
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