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Perspective on Expectations from US Fed Meet By Mr. Gaurang Somaiya, Forex & Bullion Analyst Motilal Oswal Financial Services

“Market participants will be keenly keeping an eye on the advance reading of second quarter of GDP and a negative number could reaffirm expectation of a slowdown in the US economy. GDP has contracted in the last quarter and another quarter of contraction could put the economy on the brink of recession. The Fed could consider raising rates thrice this year; with one at the July meeting and the other two in the next couple of meetings after that. But the rates hike after the July meeting could be smaller than the one we have seen in the recent ones. Recent data has shown signs of an economic slowdown while inflation remains stubbornly high, with claims for jobless benefits rising to its highest in eight months last week. Market participants at this point of time have discounted a 75bps rate hike with a hawkish stance and a 100bps rate hike could strengthen the dollar against its major crosses.”

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