The US Federal Reserve did not change the policy interest rates once again, how will the impact be seen in the Indian stock market today?

The Federal Reserve once again left key rates unchanged. This is the seventh consecutive review in which rates have been kept steady. On Wednesday, June 12, the Federal Reserve announced the results of the meeting. The impact of this decision will be seen in the Indian stock market today

With rates stable, the possibility of further rate cuts this year has receded. Officials estimate that rates could fall by just 0.25 percent in 2024, and this cut is now possible in December. Earlier in the March review, three cuts of 3/4 per cent were given which were expected to start from the second half of 2024. Currently, the policy rate is stable at 5.25 percent to 5.5 percent.

No change was made in the rate

The decision to keep rates steady is due to inflationary expectations. The Federal Reserve's goal is to bring inflation down to the 2 percent target. However, the inflation rate seems to be far from the target. The Fed now projects inflation at 2.6 percent at the end of December. The estimate was 2.4 percent in the March review. That means the Fed has raised its inflation expectations. At the same time, the Federal Reserve is not overly impressed by these figures even after the slowdown in inflation.

Statement by Federal Reserve Chief Jerome Powell

At the same time, Federal Reserve Chief Jerome Powell said that the rate of inflation has moderated but is still very high. We are committed to bringing the inflation rate down to 2 percent which will help the economy and benefit everyone. He pointedly said that the inflation rate data received so far did not convince the Federal Reserve that inflation was now moving closer to the 2 percent target. We need better data on this to increase our confidence in the 2 percent target.

If the Fed's signals are to be believed, rate cuts will come later and at a slower pace than investors expect. At the same time, a Reuters report predicted that the pace of rate cuts could accelerate next year and cut by one percent each in 2025 and 2026.

Rates remained steady for the seventh time in a row

This is the 7th consecutive time the Federal Reserve has held rates steady. Currently the rate is stable at 5.25 to 5.5 percent. With this, interest rates remain at a 23-year high. Earlier, to control rising inflation, the Federal Reserve had started raising rates from March 2022 and raised rates by 5.25 percent by July 2023. The Federal Reserve has left rates unchanged since July 2023.