Amid strong expectations, the US Federal Reserve has raised its interest rate by 0.25% after three years. In the meantime, it is expected to increase to 6 more meetings to be held in the current year. Amid a meeting last march 15 and 16, this dramatic decision was unveiled. This is since inflation in the united states has continued to rise.

Increase in interest

Inflation in the united states is at a 40-year low. It is noteworthy that this was amid a continuing rise in fuel prices. In the meantime, the interest rate has risen. The consolidated rate is expected to increase to 1.9% in the next 6 meetings in the current year. Not only that but it is expected to triple in 2023.

Debt can have an impact

This is expected to have an immediate impact on interest rates on loans. The bank last raised interest rates in 2018, after which it suffered huge losses due to the Corona epidemic. The interest rate has not been changed to compensate for this.

Can slow growth

The US Federal Reserve has kept interest rates low to support the economy and to support recruitment. So while the current rise in interest rates will put pressure on the growth rate, it will also keep inflation at an all-time high.

February situation

Inflation, which peaked at 7.9% in February, is now compounded by the Ukraine-Russia crisis. This has further increased the price. This is expected to trigger further inflation.

Investments can go out

 In general, if a country's interest rate rises, it could lead to an outflow of foreign investment in other countries. Investments in the stock market, especially the stock market, maybe out. 

In that sense, the rise in interest rates in the united states, the world's largest power, could lead to an outflow of investment from neighboring countries, including India.

It May have an impact on the stock market

And it will lead to investments in safer markets. In particular, the indian stock market alone has seen an outflow of about Rs 2 lakh crore since last October. This may no longer have an impact in the coming days.

May encourage india to increase interest

In india too, the repo rate has not increased in recent times to stimulate growth. However, with the current increase in the US, india may also be motivated to increase. 

The market could plummet if large-scale investments outflow in India. It will also lead to an increase in lending rates in indian banks.

What is the indirect impact?

As many US companies are doing their operations in india, it may be tempting to cut costs as interest rates rise in the US. Can have an impact on production in particular. Although this does not have a direct impact, indirectly companies may face some problems.