All eyes on Federal Reserve Bank after 2 bank failures: Big decision to be taken at important meeting tonight

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New Delhi, Dated 22-March-2023, Wednesday

Today is a very important day for the world, as the US Federal Reserve Bank may take an important decision on interest rates in its meeting tonight. The Fed Reserve will announce the decision tonight, Indian time. If the Fed Reserve increases the interest rate, it will have a direct impact on the stock market around the world, including the Indian stock market. After the bankruptcy of Silicon Valley Bank and Signature Bank in the US, and with the US inflation rate remaining at 6 percent in February, it is not an easy decision for the Fed Reserve.

A major challenge is the banking crisis amid rising inflation

While the biggest challenge facing the US central bank is to curb rising inflation rates, experts are expecting the Fed Reserve to raise interest rates once again. However, given the banking crisis, this may lead to a modest increase in interest rates. In January 2023, Lisa D. Cook, a member of the Board of Governors of the US Federal Reserve, expressed concern and said that despite some positive signs recently, the inflation rate in the US is very high. He also said he was committed to returning the inflation rate to the US target of 2 percent.

Will the Fed Reserve follow the Europe model?

Like the Fed Reserve, the European Central Bank faced similar challenges at last week's meeting. However, the ECB ignored the Credit Suisse crisis and hiked interest rates by 0.50 percent. Keeping this situation in mind, if the Fed Reserve also takes a decision like the ECB, what will be the attitude of the investors will have to be seen.

Fed Reserve's decision will have an impact on India

If the Fed Reserve Bank increases the interest rates, it is clear that there is a recession in America and its impact can be seen in the next monetary policy in India. Because inflation is still a concern for RBI. However, many economists are now recommending that the RBI should put a hold on interest rate hikes now, as failure to do so could have a negative impact on growth.

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