Interest rates increased in America and European countries

- Struggle continues from America to Europe to stop historic high inflation

- After the US Federal Reserve's 0.50 percent hike, interest rates in England, European Union, Switzerland, Norway also increased.

AHMEDABAD: Local central banks in the US, European Union, England, Switzerland and Norway continued to raise interest rates in the last 24 hours to stem historic inflation, without worrying about an economic slowdown. Not only this, America, the European Union also indicated that there is still a situation in which the interest rate has to be increased. In America, the world's largest economy, the chairman of the Federal Reserve, Jerome Powell, also warned that there will be severe consequences if there is a failure to curb inflation and do not expect interest rates to fall before 2024.

Stock markets in the US, Asia and Europe fell on worries that higher interest rates would increase interest costs for consumers and companies, reduce purchases and lead to an economic slowdown.

On Wednesday night, the Monetary Policy Committee of the American Federal Reserve increased the interest rate by 0.50 percent. With the seventh consecutive increase this calendar year, the federal interest rate in the US has now reached a 15-year high of 4.25-4.50 percent. The committee had announced an increase of 0.50 per cent as expected instead of 0.75 per cent like the previous four hikes, but the accompanying signal left the market reeling. The Federal Reserve has signaled that it will have to raise interest rates three more times in 2023, and that any reduction in lending rates is unlikely before 2024. In the US, inflation fell to 7.1 percent in November, which is much higher than the Federal Reserve's target of 2 percent, and that means interest rates will continue to rise. Concerns are being expressed that due to high interest rates, there will be an economic recession in America in 2023, the growth rate of the economy will be zero.

A series of interest rate hikes were announced in Europe on Thursday. The first announcement was made in Switzerland, considered a tax haven. It was announced to increase the interest rate by 0.50 percent to 1 percent. After this, an increase of 0.25 percent was announced in Norway. The rate of inflation in Norway is as high as 6.5 percent, so the interest rate has been increased to 2.75 percent. It is important to note here that the Reserve Bank of India last week raised the repo rate by 0.35 per cent to 6.25 per cent even as inflation continued to fall, arguing that the fight against inflation is not over in India either.

Suffering from the highest inflation rate in the last 41 years, Bank of England has also announced to increase the interest rate by 0.50 percent. The interest rate in England has been raised for the ninth time in a row this year to 3.50 percent. Inflation in England is at historic highs due to record energy prices fueled by the Russia and Ukraine wars. On the other hand, there are also warnings of further interest rate hikes in the future despite political instability and the economy teetering on the brink of recession. Six members of the Bank of England favored raising interest rates by 0.50 percent. Two members opposed and one member favored a steeper increase of 0.75 per cent.

At the end of the day, the central bank of the European Union, the European Central Bank (ECB), announced an increase of 0.50 percent and now the short-term interest rates have reached two percent. The increase in the interest rate was milder than the previous 0.75 percent, but the bank made it clear in its statement that the interest rate would have to be increased in the coming days, the fight against inflation will continue.

Stock markets in the US, Europe fell on Thursday amid a series of interest rate hikes and predictions that the situation will continue in the future. Dow Jones index is now down 1.88 percent or 640 points, Nasdaq is down 2.39 percent or 267 points. In Europe, the London FTSE index has decreased by 80 points or 1.07 percent, the DAX has decreased by 3.27 percent or 427 points in Germany, and the CAC has decreased by 3.33 percent or 234 points in France. Crude oil fell on concerns that interest rates will reduce demand, while gold futures fell 1.36 percent or $24 to $1,793.45 an ounce as the dollar rose.