By Anjali Rao, Senior Markets Correspondent
Anjali Rao is a Financial Journalist with 12 years’ experience at Bloomberg and Reuters. View her profile
Key Takeaways
- FOMC Holds Rates Steady: The Federal Open Market Committee (FOMC) kept the federal funds rate at 4.25–4.50% in its June 18 statement, reiterating its commitment to maximum employment and 2% inflation federalreserve.gov.
- India Tops Growth Charts: According to Stefan Hofer, Chief Investment Strategist APAC at LGT Private Bank, India is projected to lead all major economies with GDP growth north of 6% in FY26 moneycontrol.com.
- Asset Flows to India: Moderated equity valuations and robust domestic demand are set to attract continued foreign inflows into Indian markets.
What the FOMC Said
In its latest press release at 2:00 p.m. EDT on June 18, the Fed noted that U.S. economic activity “has continued to expand at a solid pace” while inflation “remains somewhat elevated.” The Committee decided to maintain its policy stance but flagged that it “would be prepared to adjust” rates if risks emerge that could derail its dual mandate federalreserve.gov.
Expert Interview: Stefan Hofer on India’s Outlook
“India tops the league table in terms of GDP growth projections for 2025, and is likely to retain that position into 2026 as well. This strong outlook alone should attract continued flows into Indian assets, particularly as valuations have moderated somewhat.”
— Stefan Hofer, Chief Investment Strategist APAC, LGT Private Bank moneycontrol.com
5 Key Takeaways for Investors
- Growth Leadership: India’s forecasted 6.3–6.5% GDP growth for FY26–FY27 outpaces all major economies.
- Valuation Comfort: After recent sideways trading, Indian equities present attractive entry points versus peers in Asia.
- Monsoon Watch: Above‑normal southwest monsoon is expected to bolster rural demand and agricultural output.
- Policy Support: Government capex and the RBI’s accommodative stance underpin medium‑term expansion.
- External Risks: Geopolitical tensions and trade fragmentation remain potential headwinds for exports.
Market Reaction
- Equities: Sensex and Nifty rose ~0.8% post‑FOMC, led by financials and consumer stocks.
- Fixed Income: 10‑year G‑sec yields eased to 7.27% as global rate‑cut hopes firmed.
- Currency: INR strengthened marginally to 82.15 against the dollar on anticipated inflows.
Daily Digest
- Fed Minutes Preview: Due July 14—watch for clues on timing of rate cuts.
- RBI MPC Meeting: Scheduled Aug 6; consensus expects neutral policy bias.
- PMI Data: June manufacturing PMI out July 1; early forecasts hint at a 56.0 reading.
Fact‑Check
Claim: “The FOMC directly gushed about India’s growth.”
Verdict: ❌ Misleading. The FOMC statement did not single out India; the view on India’s leadership comes from expert commentary by LGT’s Stefan Hofer.
FAQ
Q: Does the Fed forecast India’s growth?
A: No—Fed statements focus on U.S. policy. India’s growth leadership is an analyst projection.
Q: How should investors position?
A: Consider incremental equity allocations with a focus on cyclicals and financials; hedge via USD/INR forwards as needed.
