As the Fed hiked rates by 25 basis points on December 14th, it brought back memories of the last rate hike in December 2015 when the global markets lost nearly $12 trillion in terms of market capitalization. The question is whether such a scenario could replay again this time around. It is highly unlikely for 4 key reasons… Continue reading
Key Pointers Emanating from the Fed Funds Meet in December 2016…
- The Fed in its December meet decided to hike the Fed Funds Rate by 25 basis points from the range of 0.25-0.50% to the new range of 0.50-0.75%. This rate hike comes a full 1 year after the rate was last hiked by 25 basis points in December 2015.
The markets were largely disappointed by the decision of the Monetary Policy Committee (MPC) to maintain status quo on rates. The expectation was for a 25-50 bps cut in rates. However, the choice of the MPC not to cut rates was a good decision in retrospect. Here is why… Continue reading
The RBI monetary policy announced on December 07th 2016 had an element of surprise in that it maintained status quo on repo rates. Considering the low levels of inflation, weak growth and the side effects of demonetization, the markets were expecting a rate cut in the range of 25-50 bps. However, the RBI chose to err on the side of caution.. While the details of the deliberations of the Monetary Policy Committee (MPC) will be available on December 21st, there was virtual unanimity on the decision to maintain status quo on rates. Here are the key highlights of the monetary policy announcement… Continue reading
What it means for the UK and the EU…
Well the verdict has finally been delivered. It is a BREXIT vote; a vote to move away from the European Union. To be fair, Britain was never part of the common currency, especially after the debacle of 1992 when the Pound was ejected from the ECU due to constant short selling by the Soros Fund. But the exit from the EU could be much bigger for two reasons. The EU has a GDP of nearly $18 trillion and it is substantially larger than what it was in 1992. Secondly, global markets are much more interlinked through interest rates, currencies and derivative contracts than at any time in history. Continue reading