Non-committal
The US Federal Reserve’s decision to maintain interest rates between 5.25 and 5.50 per cent has left the financial world in a state of uncertainty.
The US Federal Reserve’s decision to maintain interest rates between 5.25 and 5.50 per cent has left the financial world in a state of uncertainty.
Even though the pause decision of the US Federal Reserve was on expected lines, the commentary was not hawkish as the market feared, says V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
This duality of tightening and loosening monetary policy underscores the Fed's delicate task. It is clear that the Fed is well aware of the inflation dragon it's trying to slay.
Indices of the domestic equities market extended their gains in the morning trade, tracking strong global cues on Monday. There is a possibility that there would be a rate hike by US Federal Reserve the next month. With the GDP for the fourth quarter anticipated this week, it is expected that GDP for FY23 will surpass 7 per cent.
US central bank's Vice Chair Lael Brainard has said that US Federal Reserve is expected to continue to keep its monetary policy restrictive for some time in order to ensure that high inflation numbers move back to target over time.
Clarida stated at a virtual event held by the Brookings Institution on Monday that if the unemployment rate falls to 3.8 percent from its current level of 4.6 percent by the end of 2022, the US labour market will have reached its estimation of maximum employment.
The jump comes after the central government took initiatives to compete with the ongoing slowdown in the Indian economy.
Earlier, owing to strong job data from the US had faded hope of an aggressive rate cut. Analysts said that a rate cut was positive for the emerging markets like India.
Market expects pick-up in foreign portfolio investors' inflows into domestic equities. The Fed's decision , analysts say, is positive for emerging markets such as India.
The US central bank left interest rates unchanged but opened the door for a possible rate cut in the future.
