The Fed has raised interest rates by 25 bps in its Mar 2023 policy meeting Says Mr Anand Varadarajan, Asit C Mehta Financial Services
Below View On US Fed by Mr Anand Varadarajan, Director, Acit C Mehta Financial Services Ltd
"The Fed has raised interest rates by 25 bps in its Mar 2023 policy meeting. It has commented that the fight with inflation will continue which created a sense of caution amongst investors causing some panic in equity markets.
However, the Fed has also kept the status quo on the terminal rate at 5.1% indicating that going forward there is expectation of only one more hike.
The inflation numbers are already showing signs of slowing down. The latest policy action is pointing out that slowing inflation has been encouraging. It also shows that the Fed believes that further hikes might not be needed to ensure that price pressures eventually drop to its 2% target. This would probably allow the Fed to start cutting rates in the second half of the year.
The Fed is also working on a plan to stabilise the financial markets in connection with recent concerns in a few regional banks in the US. An announcement is expected to come soon which would pacify the negative sentiment in the markets"
