<p>On September 20, the US Federal Reserve kept the benchmark overnight interest rate at 5.25 to 5.50 percent. However, the US central bank hinted that there would be another increase this year to combat inflation.</p>
<p>The main interest rates are at their highest position since 2001 after being hiked for the eleventh time by 25 basis points (bps) in July to 5.25–5.50 percent.<img decoding=”async” class=”alignnone wp-image-192099″ src=”https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-the-majority-of-spanish-womens-footballers-agree-to-play-after-the-new-agreement-b.png” alt=”theindiaprint.com the majority of spanish womens footballers agree to play after the new agreement b” width=”1173″ height=”880″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-the-majority-of-spanish-womens-footballers-agree-to-play-after-the-new-agreement-b.png 400w, https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-the-majority-of-spanish-womens-footballers-agree-to-play-after-the-new-agreement-b-150×113.png 150w” sizes=”(max-width: 1173px) 100vw, 1173px” title=”US Fed Maintains Interest Rates at 5.25–5.5%; Will It Raise Them in the Future? Read Full Proposition 3″></p>
<p>“Over the longer term, the (FOMC) Committee aims to attain maximum employment and inflation at a rate of 2%. The Committee made the decision to keep the target range for the federal funds rate at 5-1/4 to 5-1/2% in order to further these objectives. The Committee will keep evaluating new evidence and its implications for monetary policy, according to a statement from the US Federal Reserve.</p>
<p>It said that recent data points to a healthy rate of economic activity growth. Although job growth has slowed recently, it is still substantial, and the unemployment rate is still quite low. Inflation is still high.</p>
<p>“The American financial system is strong and dependable. Household and company credit restrictions are anticipated to have an impact on employment, inflation, and economic growth. The scope of these consequences is yet unknown. The Committee continues to pay close attention to inflation concerns, according to the US Fed.</p>
<p>What Effect Will It Have On The Indian Equity Market?</p>
<p>According to Rohit Arora, CEO and co-founder of Biz2Credit and Biz2X, the US Fed maintained interest rates steady while indicating another rate rise of 25 basis points before the year’s end. The Fed’s prediction that interest rates would stay higher for longer than anticipated is the key policy. According to the Fed’s recommendations, the markets shouldn’t anticipate any rate decreases for the first half of the year, and even if inflation will continue to decline, interest rates will stay substantially higher the next year.</p>
<p>He continued by saying that the US Fed has also increased this year’s GDP growth rate by twofold and decreased projected unemployment. This indicates that even if inflation decreases, interest rates will be higher for a longer period of time. This indicates that debt will continue to be the most costly for a longer time.</p>
<p>Anita Gandhi, whole-time director and head of institutional business at Arihant Capital, said that rather than the rate decision, which has already been taken into account, the market’s response on Thursday would be influenced by the US Fed’s statement. Investors should keep an eye on the Fed’s forecast for clues about upcoming monetary policies and their possible effects on different industries and asset classes.</p>
<p>Prior to the US Federal Reserve’s interest rate announcement on Wednesday, strong selling in banking and energy companies together with unfavorable global trends caused the benchmark indexes BSE Sensex and NSE Nifty to drop by approximately 796 points, or more than 1%, to 66,800.84. The NSE Nifty lost 231.90 points, or 1.15 percent, to close at 19,901.40, below the 20,000-point threshold.</p>
<p>To settle at 83.09 (provisional), the rupee gained 23 paise versus the US dollar.</p>
<p>Full Statement from the US Federal Reserve:</p>
<p>Recent data suggests that the rate of economic growth has been strong. Although job growth has slowed recently, it is still substantial, and the unemployment rate is still quite low. Inflation is still high.</p>
<p>The American financial system is strong and dependable. Household and company credit restrictions are anticipated to have an impact on employment, inflation, and economic growth. The scope of these consequences is yet unknown. The Committee is nevertheless quite concerned about the dangers of inflation.</p>
<p>Over the long term, the Committee aims to attain maximum employment and inflation at a rate of 2%. The Committee made the decision to keep the target range for the federal funds rate at 5-1/4 to 5-1/2% in order to further these objectives. The Committee will keep evaluating new data and how it may affect monetary policy. The Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments in determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time. In accordance with its previously disclosed objectives, the Committee will also keep cutting down on its holdings of Treasury securities, agency debt, and agency mortgage-backed securities. The Committee is steadfastly dedicated to getting inflation back to its 2% target.</p>
<p>The Committee will keep an eye on how new information may affect the outlook for the economy as it determines the best course for monetary policy. If dangers arise that may obstruct the Committee’s objectives, the Committee would be prepared to change the stance of monetary policy as necessary. The Committee will consider a variety of data while making its judgments, including readings on the state of the labor market, inflation pressures and expectations, as well as financial and global events.</p>
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