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By Malvika Gurung
Investing.com — The US Federal Reserve’s minutes from its most recent monetary policy meeting, held from Jan 25-26 was released on Wednesday and turned out to be less hawkish than anticipated.
Most participants of the two-day Federal Open Market Committee meeting noted that going ahead, if the ongoing inflation did not simmer down as expected, the Committee would have to remove policy accommodation at a faster pace than estimated.
While some officials from the meeting worried about risks of financial stability led by a loose monetary policy, the session indicated that interest rate hikes are on the way, while the unwinding of the bond portfolio could be aggressive.
The policymakers decided to not raise the interest rates right away but there’s a strong possibility of a hike coming up in March.
Markets have been shaving gains over the past several weeks, worrying about aggressive monetary tightening by the Fed amid the fastest pace of prices rising since the 1980s, the highest in 40 years.
The sentiment worsened after hawkish indications by some Fed officials, especially James Bullard, post which analysts predicted up to 7 rate hikes in 2022, each by 0.25 percentage points.
However, less aggressive minutes led markets to relax.
Most officials expect inflation to moderate as the year proceeds, with pandemic-related supply bottlenecks easing going ahead, and the Fed expects to cut some of its economic support so that its almost $9 trillion balance sheet can be unwinded.
Indian equity benchmark indices opened on a positive note on Thursday, following mixed global cues.
climbed 0.53% and gained 0.45%, as the market opened. At 10:30 am, the two indices were trading 0.4% and 0.5% lower, respectively, paring earlier gains. declined over 1%.
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