New Delhi: The U.S. Federal Reserve has once again raised interest rates today. The Federal Reserve, the central bank of the United States, has raised interest rates to 0.75 per cent, which is attributed to keeping rising inflation under control.

Although this decision in the US will cause the banks there to raise interest rates, but how it will affect India, explained as follows.

The impact of the US Federal Bank’s interest rate hike will be seen on the Indian rupee and it may go down further. The rupee has already touched its lowest level of 80 paise per dollar against the dollar. In such a situation, the US bank’s move to raise rates can increase India’s difficulties.

RBI may raise interest rates

The Monetary Policy Committee of the Reserve Bank of India is scheduled to meet between August 3 and 5, after which the RBI would announce the credit policy.

This time too, speculations of RBI raising rates have deepened. The Fed’s decision can also be considered as the reason behind this. If the RBI raises other policy rates, including the repo rate, the country’s banks will also have to raise the loan rates. This will have a direct impact on your loan EMI and they can increase.

India’s import costs will also increase

With The Federal Bank’s interest rate hike, the value of the rupee against the dollar could be reduced, which will have an impact on India’s import expenditure. With the dollar becoming costlier, India’s import costs will increase and the country’s trade deficit may widen further, which has seen a surge in recent times. With the country’s trade deficit widening, the government will have to take some steps in this direction which can have an impact on imports of commodities and other commodities.

Will lead to dip in stock exchange investment

Apart from this, the dollar rate will accelerate and it will be a more lucrative deal for foreign investors to invest in the US market or dollar-based markets than in the Indian market. Therefore, people will tend to invest more in the US market or other markets than in the stock market of India. Reducing investment in India will also threaten to deplete the country’s foreign exchange reserves.

The post Explained: Federal Reserve hikes interest rates, US recession and impact on India appeared first on TV Punjab | English News Channel.