The US stocks tanked and the dollar eked out a small gain on Thursday as solid economic data fueled worries that the Federal Reserve's monetary policy will hover at restrictive levels for longer than many market participants may have hoped.

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Jahangir Aziz, Head of Emerging Markets Economics Research and Commodities at JPMorgan said on Friday that the US Fed’s hawkish stance is weighing on the market.

In an interview with CNBC-TV18, Aziz said, “The market had brought into the idea that the Fed was probably close to being done. But, this moves towards what the Fed has been telling us in the FOMC meeting after the FOMC that they are not close to done, even though they have downshifted. And that is driving the market at this point in time.”

Also Read: Wall Street ends sharply lower, dollar gains on hawkish policy fears

He believes that China will struggle to generate positive growth in the first half of next year. However, he expects growth to pick up in the second half of the calendar year 2023 once COVID immunity significantly builds up in China.

While talking about India, he said the core inflation is going to get sticky and RBI policy will be driven by global financial conditions. He said, “We all know that core inflation is going to get very sticky and much more than what happens to Indian inflation, I think what happens to global financial conditions is what is going to drive RBI policy,” said Aziz.

(Text input from Reuters)

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