What Federal Reserve's status quo means for D-Street? Anil Singhvi explains
After the Fed's likely status quo, Anil Singhvi anticipates two more rate cuts by the US central bank.
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09:30 AM IST
In its FOMC meet, policymakers maintained status quo, keeping rates at its target range of 4.25-4.5 per cent. Nevertheless, they anticipate two rate cuts going forward this year in the backdrop of a weaker economic outlook and higher inflation.
Further, Fed Chair Jerome Powell at the press conference highlighted that a good part of the central bank's high inflation expectations comes from tariffs.
Here's how Anil Singhvi views Fed's status quo?
Zee Business Managing Editor views the move to be on expected lines with no change in key policy rates. He noted that the GDP forecast has been lower for the current calendar year. Pertinently, the average GDP forecast for the current year has declined to 1.7 per cent from 2.4 per cent with tariffs now seen as the major blow to the US economy, replacing inflation.
He added that while there is heightened uncertainty in respect of the economic outlook, there is a threat of a higher inflation amid tariff moves.
Also, the market wizard expects two policy rate cuts this year, in sync with other economists and experts.
Further, he underscored that the Fed has taken a decision to reduce its quantitative tightening, reducing the monthly limit on maturing treasury bills from $25 billion to $5 billion, with effect from April 1. The decision is aimed at better managing market liquid amid increased uncertainty around the government's borrowing programme.
What do markets like about Fed's decision as per Anil Singhvi?
The market expert is of the view that after resorting to a cut in quantitative tightening- liquidity in the market will rise. And this in a way is akin to lowering interest rates, he notes.
What markets dislike about Fed's decision as decoded by Anil Singhvi?
The outlook on heightened economic uncertainty and probability of higher inflation is what is disliked by the markets.
Will US markets rise augur well for D-Street too?
Anil Singhvi held that markets like Fed's focus on growth as well as its resort in the quantitative tightening measure. Further, he added that the US markets move today and tomorrow will be crucial. Also, he said that there is a very less likelihood of major upside in the US markets.
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