US Fed Hikes Interest Rates for First Time in Three Years
The US Federal Reserve is set to announce its policy decision on Wednesday, September 16th, after concluding a two-day meeting. Traders are heavily pricing in a 25-basis-point rate increase, which would take the benchmark rate to 3.75%-4.00%, with policymakers expected to signal the possibility of further tightening.
Investors will focus on Fed Chair Kevin Warsh's post-decision remarks for clues on the inflation outlook and the likely path of rates. Morgan Stanley expects another quarter-point rate increase in December, following recent US inflation data that was stronger than expected.
A rise in US Treasury yields above 5% could make emerging markets such as India less attractive to foreign institutional investors (FIIs), which have already sold more than Rs.14,400 crore worth of Indian stocks over the past two weeks.