Anatomy of rate hike cycles – are we done already?

The Federal Open Market Committee (FOMC) will announce its decision regarding rates on May 3, 2023, with the consensus economist estimate predicting a 25-basis-point hike, and the money market curve factoring in an 85% probability of this occurrence. A coordinated global interest rate hike cycle can negatively impact economies, slow GDP growth, cause capital to flee, and create financial instability. India’s Reserve Bank (RBI) has managed the situation exceptionally well, with a strong banking system and the possibility of taking action in case of a worst-case scenario. Investors should keep an eye on developing situations, including a probable recession in the Western world.