Fed to hold rates today but global commentary crucial: SocGen

The Federal Reserve is likely to hold rates at its monetary policy meeting in the US later tonight, but its commentary with respect to how it wants to balance relatively strong domestic conditions in the US with volatility seen in global markets will be key, says Guy Stear, Head of Emerging Markets Strategy at Societe Generale CIB.In an interview with CNBC-TV18's Ekta Batra and Sonia Shenoy, Stear said he expects the Fed to hike interest rates thrice a year, which he thinks is more hawkish than the market's consensus view of one or two.On emerging markets, he expects near-term relief for stocks but said "we need lower levels for a more sustainable rally".Excerpts from the interview on CNBC-TV18.Sonia: The consensus view is that the FOMC may have a dovish tone later today and not move on the policy up until March. Is that your view as well?A: If you look at it that probably makes a lot of sense. The most interesting thing that we are going to get out of the meeting today is some reflection from the FOMC and how they balance the domestic situation within the US which continues to be relatively robust. With the situation globally and in financial market which has been anything but robust since the beginning of the year. We have seen the financial markets generally in a very tricky place over January, it has been a very difficult month and the news coming out of China or the people's perception about the news coming out of China has generally been fairly poor. So, we will see whether the FOMC commentary focuses on what is happening in the western world or whether they take more of focus on what is happening domestically in the US.Reema: Currently the dot plot suggests that there will be four hikes in 2016. So, given the global turmoil do you think in today's meeting they will make any changes to the dot plot should we expect perhaps fewer hikes in 2016?A: Our own economists view is that we can get three hikes over the course of this year in 2016 which is actually above the consensus of the market. So, if you look at what financial markets are anticipating at the moment it is somewhere between 1 and 2. So financial markets are certainly, in terms of just the US domestic markets, are lot more hesitant and believe that the monetary conditions remain a lot more dovish than the dot plots do. So, probably we could see some shifts to the downside. But again that will be one of the interesting questions that people to focus on today.Reema: But will it be enough if there is a downward change in the number of rate hikes can it spur an equity rally or is it priced in?A: Again as I mentioned clearly financial markets are a lot more dovish than what the Fed has been talking about or what the Fed has been sort of steering people towards. Now, the consensus view what the market is anticipating is a fairly soft commentary. There may be more potential for a surprise of something not being soft and so the FOMC really focussing on what is going on in terms of the domestic market. That is not our view. It seems relatively unlikely but the view that the FOMC will be dovish is fairly well priced in, in terms of market right now