Jim O’Neill Says A Hawkish U.S. Fed Won’t Impact India
Indian Markets Should Not React Much To Rate Announcements in the United States
Economist Jim O’Neill, known for coining acronym BRIC to signify the importance of emerging economies, doesn’t see Indian markets as vulnerable to the rate hikes by the U.S. Federal Reserve.
“If India continues the recovery in the fourth quarter with growth over 7 percent, I think for a lot of commodity markets and emerging markets, what happens just in the U.S. is not as important as it was 10 years ago,” O'Neill, visiting fellow at Chatham House and former commercial secretary of the U.K. Treasury., told BloomergQuint in an interview.
The U.S. Federal Reserve Chairman Jerome Powell will announce his maiden policy later tonight. According to a poll of 41 economists conducted by Bloomberg from March 13-16, the Fed will end up raising rates four times this year.
The reaction of equity markets, however, will depend on the guidance by Powell, according to O'Neill. “If he (Powell) just confirms three hikes and there is no additional hawkishness for next year, we would probably see equity markets having a relief rally,” he said. “If he does go to four and indicate possible faster pace of tightening in 2019, I think we would see a sell-off.”