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Below is Perspective on the US Fed Reserve raising the interest rate by 0.25% by Mr Niraj Kumar, Chief Investment Officer, Future Generali India Life Insurance

“Fed has embarked on rate hiking cycle and has guided for an aggressive normalization, as it deems to be the quintessential tool to normalize the High Inflation. The aggressive rate hike outlook has come in response to U.S. witnessing a run-away Inflation exacerbated by rising commodity prices led by Geopolitical tensions & supply disruptions and posed with downside risks to global growth. However, with Fed alluding that economy is on a strong footing and that growth is strong, we reckon the rate hike cycle will be navigated much better this time. From Indian markets standpoint, while the impending Fed rate hike has already resulted in strong selling by FII’s in the last few months, the strong support by DII’s has to a great extent mitigated the impact of FII selling. We reckon the markets will take this rate hike cycle in its stride, as prospects remains strong despite the inflationary headwinds and will navigate from the unknown to known territory.”

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