The US Federal Reserve's next move is a subject of global speculation, and according to Jahangir Aziz, Global Head-EM Economics at JPMorgan, a single data point could be the game-changer.

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In an exclusive chat with CNBC-TV18, Aziz, the Global Head of Emerging Market Economics at JPMorgan, shed light on the Fed's seemingly steady stance amidst market uncertainties. He suggested that while the Fed has paused rate hikes in November, largely due to the looming threat of a US government shutdown, the decision for December remains open.

"On Friday, we are going to have the non-farm payroll, which will be a clear marker, and then we have the PCE numbers coming out," Aziz said. "If the non-farm payroll numbers are a tad lower, and if you do see some cooling off in wage growth and PCE numbers holding where they are, then you might see the Fed also pause in December."

The US non-farm payrolls data, expected later today (November 3), is seen adding 180,000 jobs in October, as opposed to 336,000 in September. Analysts also expect the unemployment rate to remain at 3.8% and wage growth to slow to 4%, a post-pandemic low.

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The resilience of the US economy, with a robust growth rate of 4.9% in the third quarter, stands in contrast to the cautious stance of the Federal Reserve, which, according to insights from Citi's Robert Sockin, seems to have halted rate hikes for now.

In a post-Fed chat with CNBC-TV18, Sockin said, "This is a Fed that really wants to be done hiking, really wants to move into a wait-and-see mode, and see how the data evolve from here.".

Following its two-day meeting in Washington, the Federal Reserve's policy-setting Federal Open Market Committee on Wednesday (November 1) decided to leave the benchmark lending rate unchanged for the second time in a row, at 5.25% to 5.50%.

Aziz also turned his attention to India's economic forecast. He predicts a moderate slowdown, with growth rates hovering between 5.5% and 6%, as "the global headwinds will start biting from quarter four."

He emphasized that, under these global pressures, achieving an average growth rate of 5% in the next couple of years would be a commendable outcome for India.

"We are looking at a growth rate around 5% in 2024-2025 with clear downside risk because the global economy could slow down much faster given how tight the global financial conditions are,” he said.

For more details, watch the accompanying video

(Edited by : Shweta Mungre)

First Published:Nov 3, 2023 5:25 PM IST