But what investors would want to see is a dovish Fed, opening the door for a slower pace of rate hikes from December.
If that happens, then equity investors are set to rejoice and take markets further up.
If a 75-bps hike comes its way, then this would be the fourth consecutive time Fed is hiking rates by that quantum.
After its meeting in September, the central bank had guided for a 125 bps hike in interest rates by the end of 2022 and saw the projected target range to be at 4.25-4.50%.
Investors across the globe would look for a guiding path on rates for the rest of the year and for 2023.
“We expect a fourth consecutive 75bp hike from the Fed at the November meeting, raising the policy target range to 3.75-4.00%, and the committee to begin a more intensive debate about whether and how to downshift to 50 bps hikes,” Nomura Financial Advisory and Securities said in a note.
But given that inflation remains near decades-high, incoming data will remain critical for policy trajectory.
BofA Securities expects the Fed to remain data-dependent and emphasize cumulative policy rate tightening over any step down in the pace.
In the event that the US Fed fails to offer a clear view on slowing down rate hikes, experts see a limited impact and lesser volatility in equities.
According to a survey done by ETMarkets, nearly 59% of the respondents see a limited downside and a low level of volatility in equities.
“Indian markets are likely to continue with their positive momentum with strong corporate earnings, supportive global markets and healthy festive demand,” said Siddhartha Khemka, head – retail research at
.
The tone of Chairman Jerome Powell on rates and the central bank’s assessment of the economy will be closely eyed.
Most economists see the world’s largest economy entering into a recession by the end of 2022.
“We expect a recession to start in Q4 2022, but increasingly entrenched inflation will likely result in continued Fed tightening through March before cuts in Q3 2023,” Nomura said.
Until now, the Fed has been mum about a likely recession, but whether it will spill the beans this time remains to be seen.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
