Federal Reserve

The International Monetary Fund has said the US Federal Reserve's decision to hike interest rates would contribute to tighter global financial conditions and suggested that India allow the exchange rate to act as a shock absorber. An IMF spokesperson on Friday said rate hikes by the Federal Reserve have historically created some pressure for emerging markets through capital flows, financing conditions, and exchange rate movements. On September 17, the Federal Reserve raised interest rates for the first time since July 2023 and indicated another hike could follow, as part of its effort to combat inflation. The spokesperson said that, as with other countries, the impact on India would depend on the magnitude, pace, and persistence of the tightening cycle, as well as domestic economic conditions. "However, India enters this period from a position of strength. Strong growth momentum, a credible inflation-targeting framework, ample external buffers, and healthy corporate and financial .

Both central banks in the coming days will release minutes of the meetings last month at which they raised benchmark rates, bowing to concerns about mounting inflationary pressures

The Fed watchdog's report, however, did highlight extensive problems with project oversight that contributed to a roughly $1 billion cost overrun for the renovation of the central bank's 2 buildings

The rupee staged a spirited recovery after slipping below the 96 level intraday and settled higher by 2 paise at 95.89 against the US dollar on Thursday on heavy dollar selling by banks, snapping its seven-day falling streak. The local currency breached the 96 level to hit a low of 96.10 to a dollar in day trade after a 25 basis point rate hike by the US Federal Reserve, sustained foreign fund outflows from stock markets and high crude oil rates. Forex traders said that dollar selling by banks on behalf of the RBI helped the local unit recoup losses and hit a high of 95.78 to a dollar. A slight correction in the dollar index and crude oil prices also supported investor sentiment despite global geopolitical volatility, they added. At the interbank foreign exchange market, the rupee opened higher at 95.88 but soon reversed gains and hit the intraday low of 96.10, breaching the 96 level for the first time since July 24. The unit recovered during the session and touched the high of 95.

Global uncertainty and interest rates may remain elevated

Experts said that the key point is not the size of the increase, but the change in direction, and expect the RBI to consider 50bps hikes in both the October and December policy meetings this year

The US president renewed his push for cheaper credit after the Federal Reserve raised its benchmark rate by 25 basis points to a 3.75-4% target range

Trump said the US should have the lowest interest rates in the world, days before the Federal Reserve's policy meeting amid persistent inflation

3 decisions, starting with the Federal Reserve on Wednesday and followed on successive days by peers in the UK and Japan, may recast the global monetary policy landscape for rest of 2026 and beyond

Kevin Warsh faces a tough choice on September rates as persistent inflation pressures clash with market expectations and Donald Trump's push for lower borrowing costs

A familiar script plays out regularly with the government fighting rupee depreciation

Warsh used a keynote speech to hammer home a message that curbing inflation is the central bank's top priority

Economists estimate the monthly jobs report from the Bureau of Labor Statistics on Friday will show a 55,000 increase in payrolls after an unexpected dip in July employment

Markets expect the Fed will raise rates in December as inflation remains elevated, while a sharp rise in bond yields indicates that investors are also pricing in some chance of a September move

Fed Chair Kevin Warsh is under pressure to offer clearer guidance on interest rates and inflation at Jackson Hole, as investors assess sticky price pressures and the outlook for monetary policy

The White House has asked Cook to respond within three weeks to mortgage-fraud allegations that her lawyer called baseless, according to a report by ABC News on Friday

Warsh, who took over as Fed chair in May, has said he has "no tolerance" for inflation that has remained above the central bank's 2 per cent target for more than five years

Experts advise investors to avoid aggressive buying and accumulate gold and silver gradually on dips as Fed policy uncertainty keeps precious metal prices volatile

Asian chipmakers have been the centre of attention this week after a deep selloff in South Korean stocks that wiped more than $2 trillion from the country's equity market rocked markets

Keeping rates unchanged would leave the Fed's policy options open while giving officials more time to see how the economy is evolving