New Delhi, June 18 (IANS) The US Federal Reserve’s decision to maintain rates unchanged for a fourth consecutive meeting was widely expected, but the updated projections reinforce a ‘higher-for-longer’ interest rate environment, analysts said on Thursday.

The division among policymakers, with half still anticipating at least one more rate hike this year, along with elevated inflation forecasts and slower GDP growth, reflects the Fed’s ongoing focus on controlling price pressures even if it moderates economic growth.

For global equities, the message is somewhat hawkish as expectations of an early rate-cut cycle are pushed further away, said Rajesh Palviya, Head of Research, Axis Direct.

“For Indian equities, the fundamental investment case remains solid, supported by resilient domestic macroeconomic indicators, healthy corporate earnings, sustained SIP inflows, and government-led capex,” Palviya added.

However, near-term market trends could be influenced by FII flows and currency movements, as global liquidity remains tight. Overall, any volatility stemming from the Fed’s stance should be viewed as an opportunity to invest in quality businesses with a medium to long-term perspective, said analysts.

At the conclusion of the Fed’s two-day meeting, the first under new Chairman Kevin Warsh, the central bank left the target rate at 3.50–3.75 per cent.

US markets fell on Wednesday and Treasury yields surged after the Federal Reserve, as widely expected, left interest rates unchanged but indicated at least one quarter-point hike could be needed later this year to rein in inflation.

Major tech bellwethers led the losses, with Microsoft, Meta Platforms, Alphabet and Amazon all closing in the red.

“After the sharp decline on Fed-driven rate-hike concerns, US stock futures are trading higher on renewed hopes that a US-Iran peace deal may soon be signed and reopen the strategically important Strait of Hormuz,” said Nandish Shah, Deputy Vice President, HDFC Securities.

—IANS

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