Stock Markets crash following historic rate hike by US Federal Reserve -

Washington: The US Federal Reserve announced a historic increase of 0.75% in the interest rates on Wednesday. This is the highest interest rate hike by the Federal Reserve since 1994. Following the United States, the Bank of England and the Swiss National Bank also announced interest rate hikes. Asian stock markets collapsed along with the US and European markets and analysts have expressed fears that this decline will continue for the next few days.

Jerome Powell, chief of the Federal Reserve, announced an interest rate hike saying that they are committed to controlling inflation raging in the United States. We have initiated steps in that direction.’ The 0.75% hike announced by Powell is the highest interest rate hike in the last 28 years. This has become the third interest rate hike in the last four months. Earlier, interest rates were hiked by 0.25% in March and 0.5% in May.

The interest rates in the United States reached between the range of 1.5% to 1.75%. The federal reserve and economists have indicated that the interest rates in the United States will be around 3.5% by the end of this year. Only last week, it was exposed that the inflation index had reached 8.6%. Sources claimed that the Federal Reserve was left with no other option but to increase interest rates given the flare-up, a record in the last four decades.

Following the United States, other leading central banks also announced interest rate hikes. The United Kingdom and Switzerland, the two leading economies of Europe, announced interest rate hikes. The Swiss National Bank decided on an interest rate hike after 15 long years. The Bank announced that this rate increase would be 0.5%. The Bank of England has been announcing rate hikes for the last four months in succession. The 0.25% announced on Thursday is the fifth successive rate hike. With this hike, interest rates in the United Kingdom have reached 1.25%.

The reaction to these rate hikes in the United States, United Kingdom and Switzerland was seen in the stock markets. US ‘Dow Jones’ index crashed by 460 points. ‘S&P 500 Futures’ crashed by 1.7% and ‘NASDAQ 100’ crashed by 2%. Stocks Europe 600 index, the leading European index, crashed by 2.3% and ‘FTSE 100’ crashed by 2.4%. There was a decline of 20% in the French CAC index compared to the high in January. The markets in the Asian countries Japan, Hongkong, South Korea, China and India also crashed.

Meanwhile, analysts have predicted that the US economy will remain slow for the next few months despite this historic interest rate hike.