Industry Applauds US Fed's Steady Rate Decision, Market Responds Favorably

Synopsis

Industry experts commend the US Federal Open Market Committee for maintaining the federal funds rate at 4.25%-4.5%, amidst ongoing geopolitical uncertainties. This decision is seen as a move to support employment and stabilize inflation targets.

Key Takeaways

US Fed maintains rates at 4.25%-4.5%.
Positive reactions from industry experts.
Focus on maximum employment and inflation control.
Expectations of two rate cuts this year.
Stocks rally despite uncertainties.

New Delhi, March 20 (NationPress) The US Federal Open Market Committee's (FOMC) decision to keep the federal funds rate steady at 4.25 per cent-4.5 per cent has received acclaim from industry specialists, particularly in light of ongoing geopolitical tensions.

The US economy is experiencing a swift expansion of economic activities, with a stabilized unemployment rate remaining low, supported by strong labor market conditions.

"The Fed's decision to maintain the current rates is commendable amidst rising uncertainties concerning the economic outlook, effectively promoting maximum employment and striving to bring inflation back to the 2 per cent target," stated PHDCCI President Hemant Jain.

Looking ahead, the industry chamber anticipates that the US Fed will continue to assess the impacts of incoming data on the economic outlook and will be ready to modify its monetary policy stance if necessary.

Dr. Manoranjan Sharma, Chief Economist at Infomerics Valuations and Ratings Ltd, noted that while the Fed has numerous factors to consider in its risk assessment, it remains focused on the dual objectives of ensuring full employment and maintaining low inflation.

"Given the elevated global uncertainties and the complexities arising from President Donald Trump’s major policy shifts, the Fed opted to keep rates unchanged," Sharma remarked. "This decision was expected due to the increased uncertainty surrounding the economic forecast. However, the Committee remains vigilant about the risks associated with both aspects of its dual mandate."

The Fed projects two rate cuts this year and anticipates that the core personal consumption expenditures price index, its preferred inflation measure, will reach 2.8 per cent by 2025, an increase from a previous estimate of 2.5 per cent. Additionally, it expects GDP growth to be 1.7 per cent this year, revised down from an earlier prediction of 2.1 per cent, as emphasized by Sharma.

Stocks, including domestic equities, have seen a significant rally, as slower growth may lead to further rate cuts; however, the optimism is tempered by tariff-related uncertainties, which US Fed Chair Jerome Powell has also highlighted.

"Nevertheless, the broader indices - NSE 500, small-caps, and mid-caps have surpassed their respective falling channels and exhibited bullish reversal patterns during what is traditionally a bullish season," remarked Akshay Chinchalkar, Head of Research at Axis Securities.