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Monday, 3 December 2018

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Slowing of interest rates hikes in US may lead foreign investors to India

Slowing of interest rates hikes in US may lead foreign investors to India







Due to slowing of interest rate hikes in the US, high base impact of US corporate earnings and emerging markets, foreign investors can move to markets like India due to stable profit growth.

It seems that Jerome Powell, chairman of the US Federal Reserve (an institution like RBI in America), has given India a Christmas gift. The Federal Reserve has changed its stance on interest rates to 'decrease the neutral rate'. In this way, he has reduced the scope for increasing the interest rates rapidly. With this, the fear of increasing the cost of funds will be reduced.

This approach means that there will be no increase in interest rates in the US. This should increase the appeal of all emerging market assets. India can look forward to others in 2019 as one of the major economies to enter fast growth in the world.

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