After US Federal Reserve, Bank of England announces interest rate hike:

Washington/London: The British central bank followed suit after the announcement of an interest rate hike by the US Federal Reserve on Wednesday. These countries, the world’s leading economies, have increased interest rates by half a percentage point each. The US has raised its interest rate to 4 per cent and the interest rate in the United Kingdom has gone up to 3 per cent. This is the highest interest rate since 2008. After this announcement, in the last 24 hours, there was a strong reaction from the international stock markets. The stock indices of the United States, Europe, and Asia fell between one to three and a half per cent.

The Russia-Ukraine conflict and global supply chain constraints continue to shock the world’s leading economies. Major countries, including the US and Europe, have witnessed a record spike in inflation. Fuel prices have reached record highs and common people are facing a cost of living crisis. Hundreds of companies worldwide have started to cut staff and the world’s leading financial institutions have warned that an economic recession is imminent. Against this backdrop, interest rates have been consistently raised by the world’s major economies, citing the reason for curbing domestic inflation. Wednesday’s 0.75 per cent increase by the US Federal Reserve was the sixth rate hike in the last eight months. This is the fourth time in a row that the interest rate has been raised by 0.75 per cent. However, despite these continuous increases, the inflation rate in the United States is still above eight per cent, so the effect of the interest rate increase is not visible. The Federal Reserve’s rate hikes have only strengthened the US dollar and other countries are facing serious consequences.

After the United States, the Bank of England also announced an increase in interest rates by 0.75 per cent. After this announcement, the interest rate in the United Kingdom has increased to three per cent. This is the highest interest rate since 2008. The Bank of England justified the increase as necessary to prevent inflation. At the same time, the Bank of England also warned that the UK might face the longest economic recession of the century.

The effects of US and UK interest rate hikes have been felt on the stock markets. US stock indices fell by one and a half to three and a half per cent. European stock indexes also lost more than one per cent. Asian stock indices have also tumbled by half to three per cent. In the currency market, the US dollar strengthened and the Japanese yen, pound, euro and lira depreciated.