The two day meeting of US Fed ended yesterday night when Fed announced to keep rate unchanged. The recent rise in the US inflation rate is in line with the US Central Bank's expectations and is likely to be sustained. This decision does mean a most probable hike in interest rate when US Fed slated to meet next, in June 2018. The Fed had raised rate in its previous meeting held in March 2018 and market expectation certainly believes two or possibly three, more rate hikes this year.
Although US economic growth slowed down to 2.3% p.a. during first quarter of the Calendar year yet a pace is expected to pick up later due to Corporate Tax cuts and fiscal stimulus. The unemployment rate has fallen in March to 17 year low of 4.1%, which is lower than Fed's long term estimates. US 10 year bond yields have come down to around 2.94% post touching a high of 3% in the recent past.
US Fed preferred to adopt a wait-and-watch policy in respect of discernible economic risks due to a trade war between US and other nations, particularly China. Post US Fed announcement, Dow Jones Industrial Average Index fell by 170 points. Indian Stock Markets also ended in red on Thursday after opening on a positive note.
The FPIs/FIIs were net sellers on the Indian Stock markets with net sales of Rs 148 crores whereas DII pulled out almost Rs 579 crores from the Stock markets today. The BSE SENSEX was down by 73 points as compared to NSE NIFTY fall of 38 points. The 10 year GSec bond yield closed at 7.73% p.a., and US dollar-INR exchange rate ended at INR 66.55 today.
More current updates would follow. Keep watching this space!
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