Fed taper unlikely today, may wait till June'14: StanChart

Sarah Hewin, Senior Economist, Standard Chartered is of the view that the Fed will not only hold back on taper today, but will hold back until June of next year. Therefore, with continuation of Fed’s quantitative easing there will liquidity coming in globally both into emerging as well as developed markets, she adds.For India in particular, as an emerging market it will naturally benefit from the excess liquidity but domestic issues like politics etc will also be watched by global investors, she adds.

Also read: Taper or no taper, the Fed will never end QE: Marc FaberBelow is the verbatim transcript of her interview on CNBC-TV18Q: What is your opinion with regards to what the Federal Open Market Committee (FOMC) could throw up today?A: We think they are going to hold back from tapering today. In our view they can probably afford to wait several more months before tapering; making sure that recovery is entrenched and looking for inflation to pick up. We have seen some positive data recently on the consumption and employment side.Therefore, in our view the FOMC is going to take a cautious stance at this meeting.Q: In that case do you think the equity markets are right with the kind of rally that we have seen today or at least the kind of rally that they are going into this event with and what would be your call on emerging markets in particular?A: As long as the Fed is doing quantitative easing (QE) at the current pace then that’s injecting liquidity to the global economy and so it is going to be positive for equities. We would argue that he is positive for emerging market stocks as well. If we are right and the Fed doesn’t make a move until next year; our view is that they won’t taper until June of next year, then that indicates a lot more liquidity that is going into the global economy and will be supportive both for emerging and developed markets. Although at some point the Fed will taper and till that happens it is going to be as oppose nervousness ahead of each Fed meeting about what the next step is going to be and we will have to bear that in mind.Q: What would your opinion be on how you would be positioned towards India?A: From India’s point of view there are other domestic issues which are going to be important; politics cannot be ignored. However, if we take the global environment then we would feel that this current situation of very easy US policy is broadly supportive of emerging markets and that applies to India as well.