Business Standard

Federal Reserve balance sheet expands despite a hike in policy rate

This has cushioned the blow, resulting in a mild correction in risk assets like equity, say analysts

Illustration: Ajaya Kumar Mohanty
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Illustration: Ajaya Kumar Mohanty

Krishna Kant
The financial markets are under pressure as the Federal Reserve has changed its course and begun to raise its policy rate in a bid to fight record-high inflation in the United States. Earlier this month, the American central bank raised the interest rate by 25 basis points — its first rate hike in more than three years (it had last raised the Fed fund rate in December 2018).

Big adjustments in asset prices are yet to come because the US central bank continues to expand its balance sheet through asset purchases that translate into greater liquidity in the financial markets,

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First Published: Mar 28 2022 | 11:02 PM IST

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