Investors across the world focused on the US Federal Reserve’s rate decision after the conclusion of the two-day meeting of the Federal Open Market Committee, which led to a slight gain in the stock markets.
The ongoing banking sector crisis raised hopes that the US Fed would put the brakes on raising interest rates, even as inflation remained very high. The S&P BSE Sensex ended the session at 58,214, up 140 points or 0.24 per cent. On the other hand, the Nifty ended the session at 17,152, up 44 points or 0.3 per cent.
Banking shares rose as steps to stabilize the financial system in the West gave investors some cues. Financial stocks also benefited from reports that suggested US authorities were studying ways to temporarily guarantee bank deposits and expand federal deposit insurance coverage to all deposits.
Inflation data in the UK revealed further challenges for central banks, which accelerated for the first time in four months after food and drink prices rose at their fastest pace in 45 years. The Consumer Price Index rose by 10.4 percent in February compared to 10.1 percent in the previous month. The Bank of England will decide on interest rates on Thursday.
Investors are betting on a 25 basis point hike by the Fed. The Fed will also issue updated rate estimates for the first time since December and provide guidance on whether additional hikes can be expected this year. Some experts said the guidance will have more of an impact on market trajectory than the actual hike announced.
European Central Bank (ECB) President Christine Lagarde said that the ECB will adopt a firm approach that will keep inflation under control as well as assist financial markets when threats emerge. Lagarde said getting inflation back to 2 percent in the medium term is non-negotiable.