Monetary policies reversing The recent convulsions in the equity market have resulted from global central banks altering their monetary policy stance. The Federal Reserve, the United States’ central bank, in its latest meeting, announced a faster tapering programme: It will scale back bond-buying at double its earlier pace (by $30 billion each month). The bond-buying programme will now end in March instead of mid-year. It appears that Fed officials expect three rate hikes of 25 basis points each in 2022.
The Bank of England recently became the first major central bank to hike its benchmark interest rate from 0.1 to 0.25 per cent.
Persistently high inflation across the globe has forced the hand of leading central banks and led them to alter the easy monetary stance they had adopted to promote economic growth and employment in the wake of the Covid-19 crisis.
A tighter monetary policy could lead to higher bond yields in the US and other developed nations. This could in turn lead to foreign institutional investors (FIIs) withdrawing money from developed markets. They have already pulled out Rs. 31,812 crore since the start of October (till December 17). India has witnessed strong outflows as its market is more expensive compared to most emerging market peers.
Denne historien er fra January 2022-utgaven av Investors India.
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Denne historien er fra January 2022-utgaven av Investors India.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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