InvestorQ : What did US Fed say on 18 August and what does it mean for Indian markets?
Arti Chavan made post

What did US Fed say on 18 August and what does it mean for Indian markets?

Answer
image
Rutuja Nigam answered.
4 months ago
Follow

Let us first look at the gist of what the Fed actually said. The minutes of the FOMC meet announced late on 17th August appeared to indicate that the Fed would literally start tapering bond purchases by the end of 2021. However, specific time lines were avoided. The view was that substantial progress had been made towards the inflation and employment goals. However, the issue of durable inflation or otherwise, still remained a debatable issue.

For now, the impact could be minor because there are still no timelines. For the Indian markets, this could imply two important things. Firstly, it hints that the liquidity could gradually tighten towards the last quarter of the year and the first quarter of next year. Secondly, the RBI may have a problem of real rates of return on debt if the inflation continues to remain high and that could impact FPI flows.

11 Views