Jerome Powell plays confused cop! What does Fed meeting outcome mean for Nifty bulls?
Fed Chair Jerome Powell has left little chance for a Santa rally in global equity markets. While the Dow Jones recorded its worst day in over four months, the Sensex fell more than 1,100 points, nearing the 79,000 mark.
The market had already priced in the impact of a 25 basis point rate cut but was left concerned after the dot plot was revised significantly higher, with only two cuts now forecast for 2025, half of what was expected in September. According to the current projections, 2026 is also likely to see just two cuts, down from four previously.
Market watchers said Powell appeared uncertain about the labor market and unclear on whether the Fed would cut interest rates at all in 2025. His statement indicated that the «extent and timing» of further cuts would depend on data. Powell also mentioned in the post-meeting press conference that the FOMC could «be more cautious» in considering further easing, having already lowered rates by 100 basis points.
«Yesterday's meeting marked a shift toward hawkishness, with the Fed's outlook moving closer to our 'higher-for-really-long' scenario. There is a strong chance of a pause ahead – Fed Funds Futures are pricing in ~91% probability of a 'hold' at the January meeting. With policy and macro uncertainty around, it is no surprise that the Fed has chosen to signal a cautious approach, going forward – akin to driving slowly on a foggy night,» said Emkay Global's Madhavi Arora.
Also read | Rs 8 lakh crore boom takes smallcap stocks to new highs. Did you sell too soon?
