Rishav Jain

9 months ago ~40 views
A Thread on FED Monetary Policy Announcement happened Yesterday:

The monetary policy meeting of the central bank of the US, i.e., FED got concluded yesterday and a lot of things came out from that. Why is this significant to us? Isn’t only RBI’s monetary policy relevant to us? FED monetary policy is relevant to us as much as RBI’s because we live in an interconnected world and with all the globalization, every economy is interlinked with others.

There are multiple takeaways from yesterday’s meet:

1. FED kept the interest rate at an all-time low, i.e., 0% to 0.25%.

2. Since the onset of the pandemic, FED's objective was to stimulate growth in the economy with whatever they have at their disposal. Now their stance has changed from Growth to Inflation. Till now, FED's Chairman Jerome Powell addressed inflation as TRANSITORY but now they have accepted it as STRUCTURAL. They stated that growth is not the concern anymore and Employment has reached the natural rate of employment.
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Rishav Jain

9 months ago ~10 views
Let's talk about the Impact on our Equity Market:

The Indian equity market is majorly driven by foreign investors and as money was available cheap at sub-zero rates, more money was chasing the equity and resulted in steep valuations. Jerome Powell said yesterday that it’s the end of the Cheap Money era and we have been witnessing the same for the last 2 months where FIIs sold almost INR 90,000 crores of Equity but the retail participation has been resilient.
I believe that this tapering of Quantitative Easing is not like what we saw in 2013 where FED suddenly came and stated that we are ending QE and doing rate hikes. This time, FED has been very vocal and transparent and the market has started adjusting to the new upcoming era. There should not be any extra-ordinary correction in the market and any meaningful correction is healthy and provides an opportunity to invest.

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