Additionally, RBI has clarified that it is likely to increase the interest rates to near pre-covid levels implying at least 2 rate hikes of 50 bps each in the next 2 meetings. This was an action taken outside the scheduled RBI Monetary Policy meeting showing the urgency on part of RBI.
RBI too followed suit and in a surprise move, on May 04, 2022, the RBI increased interest rates by 40 bps & increased CRR by 50 bps as part of its measures to control inflation. High inflation prompted central banks all over the world to increase their interest rates. This further exacerbated the already high energy prices and led to a global rise in crude prices as the world started moving away from the Russian supply, weighing on stocks even more.
First, the rising inflation spooked the market followed by the Russo-Ukraine conflict. After witnessing a profitable 2021, the Indian equity investors entered into a not so profitable 2022.
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