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Sunday, December 08, 2019

Explained: What is expected today at US Fed Reserve meeting, how it will impact India

In light of the recent escalation of the US-China trade war and tepid economic data, this month’s FOMC meeting is being more closely watched than usual.

, Edited by Explained Desk | New Delhi | Updated: June 19, 2019 8:33:38 pm
After the committee’s announcement, Federal Reserve Chairman Jerome Powell will hold a presser.

The US Federal Reserve’s Federal Open Market Committee (FOMC) is set to deliver its interest-rate decision Wednesday following a two-day meeting. After the committee’s announcement, Federal Reserve Chairman Jerome Powell will hold a presser.

What is the FOMC?

It is a committee within the Federal Reserve System that is entrusted under US law with overseeing the nation’s open market operations as well as making key decisions about interest rates and the management of the money supply in the US economy.

What is expected today?

The central bank is expected to leave borrowing costs unchanged this time but could possibly lay the groundwork for a rate cut later this year. In light of the recent escalation of the US-China trade war and tepid economic data, this month’s FOMC meeting is being more closely watched than usual. There is an extra interest in the outcome of the meeting this time as apart from traders, who are keen to track the chances of rate cuts this year, there are a host of others who are watching the outcome to see if President Donald Trump has managed to influence the central bank to expedite its rate cut cycle.

How does this impact India?

Indian markets may remain subdued today ahead of the FOMC meet that wraps up Wednesday. The lack of change in interest rates for the present and possible rate cuts in the future can be a positive for FPI flows into emerging markets including India. This could aid in boosting India’s capital account and counter the higher CAD due to surging oil prices,

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