The Fed raises interest rates
The US Fed raised its key rate by 0.75% on Wednesday. This is the biggest increase in interest rates in 28 years. Along with this, the Fed also cut America’s growth forecast for the years 2022 and 2023. However, the Fed says there will be no recession in the country. Federal Reserve Chairman Jerome Powell announced further interest rate hikes. According to Jerome Powell, the Fed could raise rates again by 0.75 in July. He also said that the Fed has the solutions needed to bring inflation under control. Let us tell you that inflation in America is at a 40 year high.
Foreign investors sell
The data shows that overseas investors (REITs) have sold shares worth Rs 19.2104 crore so far this calendar year. This includes the sale of Rs 24,949 crore by REITs so far in June. Caesar Maasry of Goldman Sass warned: “Emerging markets could experience outflows and underperformance over the next 3 months. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said the continued sale of REITs is a blow to Dalal Street.
Due to the sharp decline in global markets, the Nifty is also experiencing a decline. Most Asian stocks lost their gains on fears of a recession. After the Fed decision, there was a jump in the US stock market, but after that Dow Jones futures fell 1.2%. Chinese stocks also closed lower. While the UK’s blue-chip FTSE 100 fell 0.5% on the possibility of higher interest rates at the Back of England policy meeting. However, the Japanese Nikkei closed with a 0.4% gain after four consecutive days of declines.
Market experts wonder if the Fed’s rate hike plan will be able to control inflation and/or lead to a recession. Dr. VK Vijayakumar said that at present, no one knows whether rising rates will drive the US economy into recession. According to a survey report earlier this week, the US economy could experience a slowdown next year as the Fed hikes interest rates to control the fastest inflation in 40 years.
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