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Below the Views on the US Fed outcome by Manish Chowdhury, Head of Research, StoxBox

On expected lines, the Federal Reserve kept its key interest rate unchanged at 5.25% to 5.5% at the end of the two-day policy meeting on Wednesday. The rhetoric of any change in monetary policy outcome being driven by incoming economic data, especially consumer price inflation and labour market data, still holds true. Though the Fed’s dot plot now forecasts just one rate cut in 2024 compared to three cuts projected in March, the economic data in the recent past has shown early signs of moderation. We believe that the Fed has shown a tinge of dovishness in its commentary, with the reaction to incoming data expected to be much quicker than earlier. This should keep risk on assets such as equities supported at least in the near term. With no indication on the timing of a rate cut yesterday, our sense is that the chatter surrounding a rate cut in September is still not off the table, given yesterday’s softness in consumer price inflation.

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