FED Rate Hike And Its Effect on Global Markets

FED Rate Hike And Its Effect on Global Markets

US bonds are believed to be the safest debt instruments in the world. If there is a hike in the interest rate there, that will definitely affect the global markets in proportion. Here, markets mean not only the bond markets, but also include currency, derivative and equity.

What is ‘FED Rate Hike’

Us Fed plays the similar role in the US, as that of the Reserve Bank of India in India. The US Monetary Policy is determined and decided by a committee called ‘The Federal Open Market Committee’. The committee-meet has so much global importance that, investors, analysts and policy makers, unanimously cross their fingers and wait for the result. That’s the impact of FED rate has on Global Markets.

Queries Details
Headquarters

Established


Chair

It’s a Central bank of

Currency

Reserve requirements

Bank rate

Interest rate target

Interest on reserves

Interest paid on excess reserves?

Eccles Building, Washington, D.C., U.S

December 23, 1913 (104 years ago)

Janet Yellen

United States

United States dollar
USD (ISO 4217)

0 to 10%

0.6% to 1.50%

1.25% to 1.50%

1.25%

Yes

US, being the world’s biggest economy, Federal Reserve of US and its actions has the capacity to stir the Global Markets. The dollar being the world’s reserve currency, decides the value of other world currencies against its value. FED rate hike /cut has the power to control its value in global markets.
US Fed Rate Hike – means, Federal Bank of US is willing to provide the banks of US with the hiked interest rates, for their lending and borrowing activities. Which, in turn, leads to hiked /increased interest rates on bonds, saving deposits, loans etc.

Due to rise in interest rates in the US, the value of Dollar becomes increased, making it more attractive to the investors, in comparison with others currencies, including Rupee.

By | 2018-02-13T23:46:52+00:00 June 21st, 2017|Categories: Debt, Equity, Featured Article|Tags: , , , , |0 Comments

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