Powell embraces tapering, holds on rate hikes
USD ended the week lower on Friday after Federal Reserve Chair Jerome Powell indicated in a highly anticipated speech that the U.S. central bank could start tapering its massive support to the economy by year end, which was not as fast as many in the market had assumed.
Powell said there had seen clear progress toward maximum employment and he believed that if the U.S. economy improved as anticipated, "it could be appropriate to start reducing the pace of asset purchases this year."
But Powell told the Fed's annual Jackson Hole symposium the timing and pace of tapering should not be construed as a signal for when interest rates will begin to rise. The speech showed Powell has not adopted the hawkish stance of some Fed officials.
INR gains despite rising Covid cases
INR traded higher last week amid broad USD weakness. SBI expects India’s economy to see growth of 18.5% in the first quarter of the current financial year. This has been upwardly revised but remains below the Reserve Bank of India’s 21.4% growth forecast.
Covid cases are once again on the rise in India with two states being asked to consider night curfews in order to bring a rapid rise in cases under control. The states of Kerala and Maharashtra have seen new daily cases above 40,000 for two days in a row on Friday.
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