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What has happened?
This week the Fed raised its benchmark short-term interest rate by 25 basis points to 1.50-1.75%, the highest in a decade. While this is only the sixth rate increase since the financial crisis of 2008 — which pushed central banks to cut interest rates to historic lows — it portends further increases in global interest rates
LIBOR at its highest
(LIBOR)The London Interbank Offered Rate, which is the rate at which international banks lend to each other and serves as a benchmark for lending rates, has risen for more than 30 consecutive sessions and is at its highest since the financial crisis. Its effect has spilled over into other markets, including the corporate debt market.
Risk of default of private borrowers increased
Rising rates amid improving global economic growth could adversely affect the capacity of private firms to service their debt
Overseas investors might take money out of India
India, which could be hit by fund outflows as overseas investors look homeward to benefit from the rising rates, would do well to take precautionary steps.
