New Delhi, 19 June (IANS). Economists and industry experts said on Thursday that the US Federal Open Market Committee (FOMC )’s decision to maintain the Federal Funds Rate at 4.25-4.5 percent is commendable, as geopolitical instability, business uncertainties and 90 days tariff breaks are underway by the US administration.
Economic activities are being seen in the US and unemployment rate is at low level.
PHDCCI President Hemant Jain said, “Uns including the Economic Outlook has come down, but it still remains high. The current stance of the Federal Reserve at interest rates is commendable at interest rates in view of the increase in uncertainty about the Economic Outlook; it is strongly supported by the maximum employment and the inflation is a target of 2 percent.
Compared to May, US Fed Chairman Jerome Powell appeared a bit more concerned about tariff-based inflation, remarking that finally, the cost of the tariff would have to be paid and some of this will have some impact on the final consumers.
However, he also said that he does not see any signs of weakening of the economy and is in a good position to wait for the final effect of the fed tariff.
According to MK Global Financial Services, “Before working by Fed, there is a possibility of waiting for meaningful signs of weakness in the labor market before working (as well as temporary one-time price increase due to tariffs will also be monitored), which means that the back cut may be in September. The market price also reflects it, which is also a 63 percent pricing for the cut, while the price is priced at only 10 percent.”
Fed reduced its GDP forecast to 1.4 percent (30 bps) for 2025 and increased its core CPI estimate to 3.1 percent (30 bps), which reflects challenging macro environment with rising price pressure and slow growth.
According to Angel One’s Waqjaved Khan, “The American equity index remained flat, but the short-term treasury yields fluctuated. In 2025, a potential 50 bPS rate cut in the rate can support global liquidity and benefit Indian markets, although the risk from the Middle East stress and trade fee can be limited.”
Further, experts estimate that the Fed will continue to assess the impact of new information on the Economic Outlook and will be ready to adjust the monetary policy as required when the risk arises.
-IANS
SKT/
