Despite the headwinds, the Indian market will continue to outperform global peers as the country has shown consistent improvement in macroeconomic data, analysts say
The stress in financial markets from big rate increases, a surging dollar and quantitative tightening through the Fed’s reducing its bond holdings has reached the point that policy makers should make financial stability the top priority, says the president of Yardeni Research.
In his fourth time in the job, the chartered accountant is facing a balance of payment crisis, foreign reserves that cover barely a month's imports, historic lows in the rupee, inflation exceeding 27% and the aftermath of devastating floods.
S&P 500 futures were flat after an initial wobble lower. Futures pointed to falls in Tokyo, Sydney and Hong Kong. The dollar made new highs on sterling, the euro and the Aussie in thin morning trade. [FRX/]
The rupee sank to a new low of 81.26 against the dollar on September 23 in intraday trade, down from 80.87 in the previous session
There was a wide consensus that the RBI will raise rates at the Sept. 30 meeting, although there were differences over how far it would go with inflation accelerating to 7% and with the rupee weakening.
Bank Indonesia pushed the policy rate to 4.25 from 3.75 percent, and the jump was higher than expected by analysts.
Norges Bank hiked its policy rate by 0.5 percentage points to 2.25 percent and warned it would "most likely" raise it again in November as "inflation has risen rapidly over the past months and has been far higher than projected".
The Swiss National Bank said in a statement that it was raising its policy rate by 0.75 percentage points to 0.5 percent.
Economists expect the UK central bank to lift its benchmark lending rate a half percentage point to 2.25% and confirm plans to sell more of the £895 billion of bonds acquired during the quantitative-easing program. Investors see a strong chance of a three-quarter-point increase.
On a day when it raised interest rates by 0.75 percentage point to a range of 3% to 3.25%, the Fed also released economic projections showing that its median forecast for unemployment is 4.4% by the end of 2023, up from the current 3.7%, meaning more than a million fewer jobs as a result of its campaign.
Soaring prices that are putting the squeeze on American families and businesses have already become a political liability for President Joe Biden, as he faces midterm congressional elections in early November.
Surging prices are poised to trigger for the first time a legally mandated central bank report to the government on anti-inflation policy responses, but the sources said the government would be comfortable if the central bank took two years or even longer to get inflation down to 4%.
The ADB now expects the area's combined economy, which includes China and India, to grow 4.3% this year, after previously trimming the forecast to 4.6% in July from 5.2% in April.
The hike was the biggest since November 1992, when the Riksbank also raised its key rate by a full percentage point.
India's banks could see their share in overall flow of funds to the economy increase for the second straight year in FY23
Markets are already fully priced for a rise of 75 basis points from the Federal Reserve, with futures showing an 18% chance of a full percentage point.
These banks offer interest rates of 7.65-8.2 percent on Rs 10-lakh car loans with seven-year repayment tenures
The central bank boosted its benchmark Leliq rate by 5.5 percentage points to 75%, according to an emailed statement. The move comes a day after data showed consumer prices jumped nearly 79% a year in August, the fastest pace in 30 years. It was the bank’s ninth rate hike this year.
"We move underweight EMBIGD (from marketweight)" JPMorgan said referring the bank's widely-tracked emerging market sovereign debt index.
The Fed is seen to raise the benchmark rate by 75 basis points this month and a half-point at the November meeting, according to a report released Friday by economists led by Aichi Amemiya. That’s an increase of 25 basis points for each of their previous forecasts for those decisions.
The bank’s 25-member governing council raised its key benchmarks by an unprecedented three-quarters of a percentage point for the 19 countries that use the euro currency.
The revised marginal cost of funds-based lending rate (MCLR) across various tenors would be effective from Wednesday, the lender said in a regulatory filing.
Das was speaking at an event organised by the Fixed Income Money Market and Derivatives Association of India.
Spot gold XAU= inched up 0.1% to $1,697.80 per ounce, as of 0055 GMT but was down 2.2% for the week so far.