FED’S NEW POLICIES CAN BRING A SLIGHT CHANGE IN INDIAN MARKETS.
The Fed has finally begun its policy review today. The members are going to consider alternative approaches to target current inflation in U.s economy. With this huge delay in making a policy framework, Fed has told media that they were not in a hurry right now. These new policies could allow waving off of its inflation goal till next year. If these policies have implemented, then this change might decrease the effects of further near term policy tightening. It can also lead to minimum and gradual increase expected and price inflation, according to Fed chief Jerome Powell. Fed is attempting to control inflation and can hit their 2 percent target since last 7 years but inflation has always fallen short. Their alternative approach can balance week prices during recessions and encourage higher prices during expansions. Although, India will get affected by their new policies. Their new effective policy change would make risk assets such as stocks more appealing. If Fed hits their 2% inflation target then people tend to invest more in U.S stocks. Various changes like reduction in Indian currency and more powerful dollar can be noticed in future.