Fed rate hike: What does hawkish interest hike view mean for Indian IT players - Explained
US Federal Reserve raised its benchmark lending rate on Wednesday (July 26) to the range of 5.25 per cent - 5.50 per cent, the highest level since 2001, and also signalled that the war against inflation will stretch, with a possibility of further increases ahead. Federal Reserve Chair Jerome Powell said it is possible the central bank will follow its latest rate rise with another one at the policy meeting scheduled for September, or it may even take a pause, depending on the macro data.
"It is certainly possible we would raise the funds rate at the September meeting if the data warranted, and I would also say it's possible that we would choose to hold steady at that meeting if that's what the data called for.'' Read more: Fed meet outcome: 4 Key takeaways from US monetary policy Fed rate hikes have a ripple effect across the globe. They are negative for most segments because they curtail economic growth.
Further rate hikes and a prolonged phase of elevated interest rates can hit the US economy significantly and may push it into a recession. An economic slowdown in the US will make the life of many Indian IT firms more miserable.
Indian IT players have guided that the road ahead in FY24 is challenging. As Mint reported, the Q1FY24 results of the IT industry are the worst in recent times in terms of revenue growth and profits thanks to the macroeconomic headwinds in the US and Europe.
The guidance of the ‘Big Four’ – TCS, Infosys, Wipro and HCL Tech – indicates that FY24 could be a fallow period that the IT industry could use to regroup and consolidate. As the Fed still wants to raise rates to bring inflation down, will the Indian IT players suffer more? Experts think it will have a very limited impact on the IT players
. Read more on livemint.com
