US Fed increases tension, draws five lines of worry on India’s forehead

After increasing the interest rate by the US Fed, the Reserve Bank of India can also increase the interest rates. Because of which an increase in the loan EMI of India can be seen.

A few days ago, the European Central Bank had increased the interest rates by 0.50 percent even after the Credit Suisse Bank crisis. Today the Central Bank of America has increased 25 basis points on behalf of the Fed. Although the Fed Chief has said that in view of the Global Banking Crisis, interest rates will be kept on hold, but this decision can affect the pockets of the people of India. According to experts, after increasing the interest rate by the US Fed, the Reserve Bank of India can also increase the interest rates. Because of which an increase in the loan EMI of India can be seen. By the way, this increase can be 25 basis points or less.

RBI can also take a big decision

After the increase from the ECB and then the American Central, the Reserve Bank of India can also decide to increase the interest rates. This increase can be a maximum of 25 basis points. If the RBI increases by 25 basis points, then the interest rates of the Central Bank in India will reach an 8-year high. At present, RBI’s policy rate is at 6.50 per cent, which can reach 6.75 per cent after the April policy meeting. Another reason for the increase in interest rates is that the core inflation in the country is more than 6 percent, even though there has been a slight decline in it in the month of February.

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The pockets of the people of India will be affected

If the RBI increases the interest rates, then the director will be seen on the pocket of the common people. There will be an increase in the interest rates of retail loans from the banks. Which includes home loan, car loan and personal loan. Banks of the country do not increase the loan amount, but increase the tenure of EMI. This means that the EMI which is for 25 or 30 months, after the increase in interest rates, it increases to 27 or 32 months. This means that the burden on the pocket of common people increases.

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There has been an increase of 2.50 percent

The process of increasing interest rates started by RBI from May 2022 is continuing till February. Before May 2020, the policy rate of RBI was at 4 per cent, in which an increase of 2.50 per cent has been seen till February. This means that the policy rate of the Central Bank has come down to 6.50 percent. In the month of February, 25 basis points were increased. Before that an increase of 35 basis points was seen. This means that the stance of RBI has been seen to be soft in the last month regarding the increase in interest rates. Some experts say that RBI should not increase the interest rates.

Foreign investors will go out

Foreign investors can withdraw their money from Indian markets due to Fed rate hike. It is being seen for the last several months that the outflow of foreign investors from India is continuously increasing due to the Fed rate hike. According to statistics, foreign investors had withdrawn Rs 28,852 crore from the Indian stock markets. And in the month of February, this outflow has been seen to the tune of Rs 5294 crore. So far this year, foreign investors have withdrawn Rs 26,255 crore from the stock markets, last year in 2022 this figure was Rs 1,21,439 crore.

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There will be a decline in the stock market

After the Fed’s decision, a decline can be seen in the Indian stock markets. This is not the first time this has happened. From March 2023 to February 2023, Fed has held 8 meetings. In which there was a decline in the Indian stock market 7 times. After the February Fed meeting, India’s stock market had gained 0.26 percent. In this table, you can clearly see how Indian stock markets reacted to Fed’s action…

Fed policy announcement date how much increased interest How was the reaction of Sensex
March 16, 2022 0.25 percent – 1.85 percent
May 04, 2022 0.50 percent – 0.06 percent
June 15, 2022 0.75 percent -1.99 percent
July 27, 2022 0.75 percent -1.87 percent
September 21, 2022 0.75 percent -0.57 percent
November 2, 2022 0.75 percent -0.11 percent
December 14, 2022 0.50 percent -1.40 percent
February 1, 2022 0.50 percent 0.26 percent

Rupee will fall

On the other hand, a fall in the rupee can also be seen. In fact, the Fed rate hike leads to a rise in the dollar index. By the way, the dollar index is currently trading at the level of 103. At the same time, it is trading at Rs 82.67 against the dollar. The chances of going beyond 83 rupees are visible. Due to the fall of rupee against dollar, India’s import bill is sure to increase. Due to which negative impact can be seen in the economy of the country.