The Fed maintained status quo in its policy meeting, as widely expected. Importantly, the Fed acknowledged ‘solid growth’ in household spending, business fixed investment in recent months and continued to see improvement in housing. It also noted that ‚the pace of job gains slowed and the unemployment rate held steady‛.
The Fed averred that inflation has continued to run below its longer-run target but retained its view that inflation is expected to rise in the medium-term as transitory effects of lower commodity prices wear off and labor market condition improves further.
Importantly, the Fed excluded the statement on global risks making the policy stance slightly hawkish. With this, a rate hike by Dec 2015 still remains on the table. However, incoming data could provide cues on the timing of the eventual lift-off.
Q2 results thus far
Early bird results have largely been in line amid overall weak demand backdrop that continued to persist across segments. 64 companies (ex Oil), under our coverage, reported aggregate PAT growth of 6% YoY.
Banking results continued to be plagued by poor growth with continuing asset quality woes. FMCG results have been disappointing with no visible improvement in urban demand whereas subdued demand environment continued in Cement with pan-India players reporting tepid volume growth. IT has been a mixed bag and Pharma witnessed weak growth in domestic business led by poor performance in acute segment and US revenue growth has been slower given lack of meaningful approvals.