Analysts concur that Jerome Powell’s address at the Jackson Hole symposium followed expectations and that the US Federal Reserve (US Fed) could raise rates by another 25 basis points (bps) in the future.
Powell stated that the US central bank is
“It (the speech) didn’t say anything revolutionary, and the overall tone was consistent with his earlier remarks. The outlook for Fed policy is uncertain as a result of Powell’s speech and extremely dependent on data. According to the markets, there is a realistic 50-50 possibility that the Fed will raise interest rates by another 25 basis points by November, according to Brian Rose, senior US economist and CIO America at UBS.
According to analysts, the market will now be monitoring the upcoming personal consumption expenditure (PCE) data on August 31, the Employment data on September 1, and the CPI report on September 13 in the US to determine whether a rate hike by the US central bank in September is necessary.
willing to raise the benchmark rates and maintain high “It appears that the Federal Open Market Committee (FOMC) intends to hold off on starting the cycle of rate hikes until November. The economic indicators should have worsened by then, preventing a raise. The risk to our baseline, though, is positive. Additional increases are likely as long as the economy is robust and the labour markets are tight, according to Philip Marey, senior US strategist at Rabobank International.borro
Analysts predict that the moves will maintain market stability at home, particularly against the backdrop of the rise observed from the March 2023 lows and the most recent CPI inflation reading.
“The most likely scenario is that Indian stocks will continue to consolidate before the upleg. Since its all-time high on July 20, the Nifty has fallen 3.1%. Still, the bottom-up evidence of a capex cycle is a big factor to consider adding to any significant decline. Money markets continue to anticipate that the Reserve Bank of India (RBI) would not raise interest rates any more, according to Christopher Wood, global head of equity strategy at Jefferies, in his weekly investor letter GREED & FEAR.
wing costs until inflation reaches the desired range of 2%.
For the third time in a row, the monetary policy committee (MPC) of the RBI left the repo rate at 6.5 percent unchanged at its August decision. However, the central bank increased its inflation forecast for 2023–2024 (FY24) from 5.1–5.4 percent. Significant improvements were also made to the projections for the second (Q2) and third (Q3) quarters of FY24, which were raised to 6.2% and 5.7%, respectively, from 5.4% and 5.4%, respectively.
Inflation measured by the consumer price index (CPI) soared to 7.44 percent in July, the highest level since April 2022. Since September 2022, the price increase had not exceeded 7% till this point.
“Due to difficulties in the external environment, equity markets are anticipated to continue volatile. Indian corporations’ corporate earnings are growing strongly, but there is little room for expansion because valuations are high. As a result, till the end of the year, investors should expect returns that are in line with earnings growth, according to Hemant Kanawala, senior executive vice-president and head of equity at Kotak Mahindra Life Insurance Company.