IGI Logo

Statement on Fed Interest rate hike By Vivek Goel, Co-founder and Joint Managing Director, Tailwind Financial Service Pvt Ltd

US Fed hikes rate by another 75 bps; signals possibility of slowing pace of tightening

The US Fed announced an increase in the federal funds rate to 2.25 percent to 2.50 percent, making this the fourth consecutive rate hike. This was also the second time since June policy that the rates were hiked by a steep 75 bps given the context of all-time high inflation persisting in July as well.

Despite this, markets reacted positively to the announcement as the rate hike was broadly in line with expectation. Further, Fed chairman Powell's remarks regarding the possibility of slowing the pace of rate hikes soon, helped improve sentiments to some extent.

This is however, in the context of how data on inflation is seen upto September policy. Accordingly, it will be important to evaluate the impact of recent tightening measures taken by the policymakers in the next few months to be able to estimate the trajectory of future policy actions towards curbing inflation while supporting growth.

Above views are of the author and not of the website kindly read disclaimer