An increase in the interest rate in the US will have an impact all over the world, especially in countries like India. Institutional foreign investors started withdrawing money from India. Now its speed will increase further.
The economic slowdown around the world is being predicted for some time now. But now his voice can be heard very clearly. It is starting from America, the country with the largest economy in the world. By the way, the global economic recession of 2008, known as the Sub Prime Crisis, also started in America. 28 major financial institutions, including Lehman Brothers, went bankrupt. This time the crisis is different. This time from America to other countries of the world, the crisis is of inflation and development. This means that economies around the world face a bigger challenge than ever before.
In the US, the Federal Reserve has increased policy interest rates by 0.75 percent in one go. For the second time in the last three months, the US central bank has raised interest rates. Its purpose is to control inflation. In the month of June, the inflation rate in the US was 9.1 percent. For the first time since the 1980s, inflation is increasing in this way in the US, and only then, as in the 1980s, America’s central bank is trying to control inflation through monetary policies. In a credit-based society like America, rising interest rates will reduce demand and slow growth. That’s when the International Monetary Fund changed its forecast and projected a growth rate of one percent in the US instead of 2.3.
An increase in the interest rate in the US will have an impact all over the world, especially in countries like India. In view of the turbulent state of the economy in India, institutional foreign investors had already started withdrawing money. Now its pace will increase because the difference between the return on their investment in India and the interest they are getting in America has narrowed. So they will invest money in a safer place. Interest rate hike in the US will not only affect the stock market, but foreign direct investment will also be affected. However, the International Monetary Fund has projected the least impact of the global economic slowdown in India. India’s situation may not worsen due to recession, but it is certain that the situation is not going to improve and it is not good for India to do so.
