Stock markets fall due to interest rate hike by Federal Reserve and 'Bank of England'.

Washington/London – International investors have lost billions of dollars in the last few days due to the crisis in the banking sector in the United States and Europe. Despite this awareness, the world’s leading central banks have once again announced an increase in interest rates. In the last 24 hours, US ‘Federal Reserve’ and the British central bank, ‘Bank of England’, have increased interest rates. Due to this, Asian stock markets, the United States, and Europe fell again.

Economists and analysts have warned that banks in the United States are going bankrupt one after the other and 50 to 200 banks will have to bear heavy losses in the future. In the past few days, the Federal Reserve’s interest rate policy has emerged as the main reason behind the failed banks. Therefore, it was indicated that the Federal Reserve might avoid a rate hike decision in the new meeting.

However, on Wednesday, the head of the Federal Reserve, Jerome Powell, announced a 0.25 per cent increase in interest rates. After this increase, the interest rate in the US has reached five per cent. While making this announcement, Powell said that his main goal would be to bring down the inflation rate in the United States to 2 per cent and that the road to reach this goal would be full of hurdles. Hence, there are indications that the Federal Reserve will maintain its rate hike policy even as the scope of the crisis in the banking sector increases. The Federal Reserve’s announcement on Wednesday marks the ninth interest rate hike throughout the year. After this decision of the Federal Reserve, there was a huge fall in the US stock market. The leading US stock index, the Dow Jones, fell by as much as 530 points. The Nasdaq fell by 190 points and the S&P500 fell by 65 points. In European stock markets, bank shares were also hit. The ‘SX7P’ index fell by one per cent. Germany’s’ Deutsche Bank’ and ‘Commerzbank’ indices fell sharply. British stock indices also fell.

After the US Federal Reserve, the Bank of England, the Central bank of Britain also announced an increase in interest rates by five per cent. After that, the interest rate in Britain has reached 4.25 per cent. Two days ago, the inflation index data was released in Britain. In February, it was revealed that Britain’s inflation has increased to 10 per cent. Therefore, it is said that ‘Bank of England’ had to decide to increase the interest rate.

The global economy has been in a recession-like environment in the last few months. Many leading institutions, including the International Monetary Fund, World Bank, United Nations, World Trade Organization and companies in the financial sector, have predicted that recession will hit in 2023. It is said that the increase in interest rates by major world countries is a major reason for this. But still, the United States, the United Kingdom and other leading countries are continuously supporting the increase in interest rates by putting forward the reason for preventing the outbreak of inflation.

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