Debt Outlook September 2022

In his recent speech at Jackson Hole in Wyoming, Jerome Powell, the chair of the US Federal Reserve, made it clear that they would continue to raise interest rates till the inflation data turns favourable^.

“The Federal Open Market Committee's (FOMC) overarching focus right now is to bring inflation back down to our 2 percent goal. Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” Powell said^.

The US central bank could raise interest rates by another 75 basis points in September, said Abhishek Bisen, Sr. Debt Fund Manager at Kotak Mahindra Mutual Fund, while discussing the outlook for September.

In India, one can expect the repo rate to rise to 6% “sooner than later”, he said. This could be followed by a long pause in rate hikes, he said.

The repo rate in India is currently at 5.40%.*

“As majority of the rate hikes get delivered, the anxiety of the markets will reduce, which will be very positive for markets,” Bisen said.

Investors can consider floating rate bonds in such a scenario, he said.

 

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^Source: www.federalreserve.gov

*Source: www.rbi.org.in

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