Liquidity conditions haven’t shown signs of returning to what it was in 2021
By Amit Shankar
Equity fund raising, for some time now, has been growing at a much slower rate than the previous years. The trend which started last year, might continue for the rest of 2023. While the overall macro picture globally hasn’t worsened, liquidity conditions haven’t shown signs of returning to what it was in 2021.
Amid rising commodity prices, among others, the policymakers’ prime objective seems to be combating inflationary pressures. Central banks across the developed economies, including in India, have continued to hike interest rates in their fight against inflation. In the first week of February 2023, the US Federal Reserve raised the benchmark interest rate by 25 basis points. Almost immediately, the Bank of England increased interest rates by 50 basis points to a multi-year high of 4 per cent. Around the same time, the European Central Bank raised interest rates by 50 basis points.
In its policy review, the US Federal Reserve said it would still require its benchmark overnight interest rate to be increased further and remain elevated at least through 2023. This will have further impact on availability of money at cheaper rates.
