BLOG
US Federal Reserve opted for oversized rate cuts
US Federal Reserve surprised market by cutting interest rate by 0.5%, in its first rate cut since 2020. US Fed opted to lower borrowing cost to preserve the strength of the economy as risk to labor market mount. Market is still expecting another 50-75 bps rate cut during the current calendar year suggesting at least 25bps cut in every meeting in coming months. Along with that policymakers see the Fed's benchmark rate falling full percentage point in 2025.
While Fed has revised down its projections for inflation and It expects core inflation to rise to 2.6% compared to June projections of 2.8%, unemployment rate is expected to rise at 4.4% by the year end than the current 4.2%. GDP growth is also projected lower at 2.0% in 2024 compared to June Projection of 2.1%.
View:
Dollar and Yields recovered after FOMC meeting as market was almost pricing the rate cuts as equities remained flat whereas Dollar recouped losses and moved back towards 100.90. Also, JPY depreciated against Dollar to move towards 143 once again. Recent appreciation in JPY has prompted the volatility to increase sharply across the asset classes. We believe that stability in JPY is important for volatility to remain lower in equities as well.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
Related content
Blogs
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Video
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.