Amidst concerns about rising inflation and its impact on the economy, the Federal Reserve has been closely monitoring the situation and adjusting its monetary policy accordingly. Therefore, the US Fed is expected to hit the brakes in its next meeting, signalling a pause in rate hikes.

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In an interview with CNBC-TV18, Jahangir Aziz, Head of Emerging Markets Economics Research and Commodities at JPMorgan said that the US Fed will likely pause in its next meeting, and this pause in rate hikes should last for a significant period.

He said, “The Fed most likely will pause, which is what our baseline view is. The market had expected the Fed to raise after the pre-meeting signals sent by both Jerome Powell and Vice Chair, Philip Jefferson, the market is basically looking at a much lower probability of a rate hike in June, but I think the pause is going to last for a very long time.”

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One key factor supporting this decision is the robust employment demand in the United States. Despite the challenges posed by the pandemic, the job market has shown remarkable resilience, with strong demand for labour across various sectors. The sustained strength in employment highlights the underlying strength of the US economy, further justifying the Federal Reserve's decision to hit the pause button on rate hikes.

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As investors and market participants await the Federal Reserve's decision, the anticipation is that the central bank will communicate its stance clearly, ensuring transparency and maintaining confidence in its actions. The pause in rate hikes signifies a thoughtful and cautious approach by the US Fed, demonstrating its commitment to fostering a sustainable and balanced economic recovery.

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(Edited by : C H Unnikrishnan)