From the Fed’ testimony last Wednesday, Fed’s Chairman Powell stated that if the economy could continue its progress as anticipated, there may be expectations of three rate cuts during the later half year. However, he cautioned that this outcome is not certain at the moment. Powell affirmed that the economy faces no imminent risk of recession, referring to the favorable unemployment rates, economic growth, and inflation figures aligning with the Fed's expectations. He emphasized the Fed's delicate position in deciding on rate cuts, on one side delaying the rate cuts would put unnecessary damage to the economy while on the flip side easing the rates soon would be inviting the inflation again.

From the US labor market, The JOLTS data met expectations with 8.9 million job openings, while the February Non-Farm Payrolls (NFP) stood at 275k which was higher than the anticipated 195k, Further the January's data was revised down from 353kto 229k. Despite strong NFP figures, the US unemployment rate reached 3.9%, exceeding the expected 3.7% and hitting a two-year high, with the previous peak being 4% in January 2022.

Looking ahead to this week, inflation figures scheduled for Tuesday and Producer Price Index (PPI) on Thursday which will be crucial events, serving as check for the Fed's assessment of the economy's trajectory and its implications for potential rate cuts.

In the Indian market, recent data indicates a 13.1% year-on-year growth in deposits and a 20.5% increase in overall loans provided by commercial banks as of February 24th over the last week.

This week, India's inflation figures are due on Tuesday, with expectations of a 5% year-on-year increase, while the Wholesale Price Index (WPI) is expected on Thursday, with a projected 0.3% year-on-year rise. January's inflation and WPI statistics stood at 5.1% and 0.27%, respectively.

The significant disparity between consumer and wholesale inflation raises questions for me about the composition of the basket of goods and the accuracy of the statistics, leaving ample room for interpretation and very less light for solid evidence.

Date : 10th Mar '24; Source - Trading Economics, Reuters

LR