The US Federal ReserveFederal Reserve is facing a tough job of keeping pace with the red-hot inflation and supporting growth.
The situation has become more challenging because of volatile crude and geopolitical tensions.
What would the US Fed do this time?
Experts believe that the US central bank might bite the bullet and announce a 25 basis points rate hike to address the worst inflation in more than 40 years.
If this happens, it will be the first-rate hike in the US since 2018. The central bank will close the door on its monetary policy because of the pandemic-era monetary policy.
The Fed wants to make borrowing more expensive so that consumers and businesses keep making investments, reducing demand and hopefully the prices.
How many rate hikes are expected this year?
Russia-Ukraine war could cause a lot of demand stalling economic growth which could lead to higher unemployment, according to analysts who have predicted anywhere between six to seven rate hikes in the year.
Foreign investors are able to pull their money from emerging markets like India back to the US for safer and more secure returns because of higher interest rates in the US.
Since October, foreign institutional investors have sold over 2 lakh crore worth of Indian equities.
Inflation for India is due to further capital flight, which will lead to increased interest rates and the rise in rupee depreciation against the dollar.
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