Fed Rate Hike and its Impacts: Check out more details here
The Federal Reserve, often known as the Fed (US central bank), voted to increase the Federal Funds Rate target by another 75 basis points on Wednesday in an effort to slow the United States’ rampant inflation, which reached a four-decade high of 9.1 percent in June. The Fed has gradually increased the planned FFR since March, from zero to approximately 2.5 percent at this point.
The Federal Reserve’s decision to pursue a bigger rate increase wasn’t entirely unexpected. In the upcoming months, it appears that there may be more increases in the policy rate. Many investors in mutual funds, particularly those who invest in debt mutual funds, are curious as to how it will affect their investments because the Fed always sets the standard for central banks around the world.
For the second time in a row, the Federal Reserve increased its benchmark interest rate on Wednesday by 0.75%. Following an increase in inflation to 9.1 percent, the US Fed decided to raise interest rates. To maintain an interest rate differential with the USA, it is commonly anticipated that the RBI will increase rates by 35 to 50 basis points.
“The market has essentially taken into account the market-expected 75 basis point increase in US Fed interest rates. At this point, inflation is considered to be the key variable to monitor, and the trajectory of inflation appears to be declining as a result of the base impact and the cooling of commodity prices. We are worried about the impending energy crisis in Europe brought on by the conflict between Russia and Ukraine.
However, given the resilience of corporate results to date, India appears to be in a strong position. Given the strong fundamentals of India, even the FII sell-off has subsided, which is a huge shift in mood. According to their investment horizon, investors can consider variable rate funds and dynamic bond funds, and they can invest methodically in stocks and debt using asset allocation strategies “ICICI Prudential Mutual Fund’s Chintan Haria, Head of Product and Strategy, stated.