Reported By: Mohammad Haris
Last Updated: September 20, 2023, 23:35 IST
The US Federal Reserve on Wednesday, September 20, retained the benchmark overnight interest rate in the range of 5.25-5.50 per cent. The key interest rate, which was raised for the 11th time in July by 25 basis points (bps), is at the highest level since 2001.
“The (FOMC) Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 per cent. The Committee will continue to assess additional information and its implications for monetary policy,” the US Federal Reserve said in a statement.
According to the recent economic data in the US, there has been an easing in core inflation, which fuelled bets that interest rates could have peaked. However, a surge in oil prices has clouded the outlook for headline inflation, providing the Fed room to keep rates higher for longer.
On its impact on Indian market, Anita Gandhi, whole-time director and head (institutional business) at Arihant Capital, said the market’s reaction on Thursday will be driven by the US Fed’s commentary rather than the rate decision, which has already been factored in. “Investors need to monitor the Fed’s outlook for insights into future monetary policies and their potential impact on various sectors and asset classes.”
On Wednesday, benchmark indices BSE Sensex and NSE Nifty fell about 796 points or over 1 per cent to 66,800.84, due to heavy selling in banking and oil stocks in tandem with weak global trends ahead of the US Federal Reserve’s interest rate decision. The NSE Nifty declined 231.90 points or 1.15 per cent to end below the 20,000 mark at 19,901.40.
The rupee, however, rebounded 23 paise to close at 83.09 (provisional) against the US dollar.
