FOMC June Meeting: The U.S. Federal Reserve has kept the federal funds effective rate unchanged at the 4.25-4.5 percent mark, unchanged since December 2024.
Analysts believe that the much- anticipated 25 basis point Fed hike this time will have minimal impact on the strength of Indian markets
The focus of investors is now going to shift towards the federal reserve’s policy decision on the most recent rate hike and the commentary of the chairman Jerome Powell on the way forward for the US economy.
Sell-off in global markets, weak Q3 results and pre-budget nervousness triggered heavy sell-off in domestic bourses as risk sentiment took a blow ahead of the Federal Open Market Committee meeting. As investors remain jittery, we caught up with Gurmeet Chadha for his insights and learnings from the market mayhem, to help retail investors navigate the wild market
This brings them more in line with broader market consensus, although they are still on the dovish end of the spectrum and reckon that rates will rise no higher than 1.625 percent until at least the end of next year.
"Indian markets (are) well placed to absorb the US Fed rate hike. Gradual approach in future increases augurs well for emerging markets," Economic Affairs Secretary Shaktikanta Das tweeted.
Four Fed presidents spoke Tuesday, and all indicated an interest rate hike could be considered in March. "All are on the same page, including hawks and doves, and especially Dudley," said Tom Simons, money market economist at Jefferies.
"They are shifting the goal post for, I think, the investing public to begin to concentrate on what kind of signals we are going to get ... at the press conference that follows the December meeting about the number of rate hikes we might see in 2017," she said in an interview with "Power Lunch."
Last fall, the Fed signaled that its December 2015 meeting was a likely time for a rate hike when it included the phrase "next meeting" in its statement, and indeed, it raised rates last December. Fed watchers expected a similar comment but the Fed statement on Wednesday, but the phrase wasn't there.
Labor market conditions remained "tight," with "modest" employment and wage gains, according to the survey, which is prepared in advance of a November 1-2 monetary policy meeting.
Amid discussion around the upcoming US election and fluctuation in the oil price, the US Federal Reserve is back on the table with the minutes from its September meeting, due at 2.00 p.m. ET.
Federal Reserve officials lowered their expectations for rate hikes in the years ahead Wednesday but teed up a likely move before the end of 2016. In a statement from the Federal Open Market Committee after this week's meeting, the central bank expressed confidence in economic growth, but not enough to make a move this month.
The Federal Open Market Committee (FOMC) was set for a two-day policy meeting on Tuesday and Wednesday. But while the Fed has indicated the meeting was "live," or that action was on the table, markets haven't been pricing in much chance of a hike.
he Fed is expected to hold off on an interest rate hike until December, though more members of the Federal Open Market Committee clearly favor raising rates, so the Fed forecast on both rates and the economy will be important.
According to global financial services major DBS, the softening trend in inflation leaves the door open for a rate cut in the fourth quarter of this calender year "with odds of a move in October on the rise".
In the near term, the commentary/actions of Federal Open Market Committee (FOMC) in the upcoming meeting on September 21 will likely set the tone for global capital flows, Abhay Laijawala of Deutsche Bank feels.
"Market expectations, to my eye, derived from federal funds futures prices, which price in no more than one 25 basis-point rate hike through the end of 2017, … appear to be too complacent," he told a conference of central bankers and financial regulators on the Indonesian island of Bali.
Policy makers had not been expected to raise rates, out of concern that a hike could stifle fragile growth.
The central bank's decision to stick with its 2016 rate path, however, appeared shakier, with six of its 17 policymakers projecting just one increase this year. Only one Fed policymaker had done so when economic forecasts were last issued in March.
Fed watchers do not expect any action from the Federal Open Market Committee, but the central bank could tweak its view on the economy or make changes to its interest rate forecast, when it releases its statement and economic forecasts Wednesday afternoon.
"Two rate hikes in 2016, that's my own call for that, if the data continue to be in line with my outlook, that's a slow and gradual increase this year," Evans, who is an alternate member of the FOMC (Federal Open Market Committee), said.
Federal Reserve Chair Janet Yellen said that given the pace of US economic growth, a Fed decision to increase interest rates could be on the cards soon
While the February Budget has been received well, India's corporate earnings haven't panned out well, says Ian Hui, Global Market Strategist, JP Morgan Asset Management.
The Fed stuck to its stance that US monetary policy will tighten only gradually and gave no hint as to whether it could lift the short-term federal funds rate at its next meeting in June.
Yellen, speaking to Economic Club of New York, noted in prepared remarks that recent readings on the strength of the U.S. economy since the beginning of the year have been mixed. All major U.S. indexes turned positive after the release of Yellen's remarks.