The federal reserve has raised it’s key interest rate by 75 basis points, in an attempt to rein inflation. It is likely to pose impact on Indian economy. The availability and cost of international financing will probably be impacted by the rate increase and fund reduction, potentially slowing foreign portfolio inflows into the Indian equities and bond markets. Even when the dollar strengthens due to the rate hikes, the rupee may decline as FPIs withdraw money from the equities and bond markets.
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Credits: Kshipra Singh and Veenit Sureka.