Economists believe the US Fed may hike a maximum of 50 bps in the next two policy meets

All eyes will be on the key US Fed rate hike decision tonight. Market is expecting a 25-bps hike with dovish commentary. According to CNBC Fed survey, 86 percent expect rate cuts or a pause by July.

After the European Central Bank (ECB) announced a 50-bps rate hike as planned, there is a sign that Fed will likely raise rates in upcoming Federal Open Market Committee (FOMC) meet, as both stay on track to tame inflation. However, rate expectations have been rapidly quivering over the last few weeks.

In an interview with CNBC-TV18, Hemant Mishra, Co-founder, and Group CIO of SCUBE Cap and CEO of SCUBE Asset Management said that the US Fed may hike a maximum of 50 bps in the next two meets.

He said, “The tighter lending standards that will happen on the back of the run that some of the banks have seen, anyway, would have meant a hike between 50 bps and 150 bps. So, the Fed is not required to hike much more than 25 bps and maybe another 25 bps later. But as I mentioned, it's a marathon. It's not a sprint. It makes sense for them to do a 25 bps and then pause.”

Former RBI Governor Raghuram Rajan, in an exclusive interview with CNBC-TV18, said that a pause in the next Fed meeting looks like a low probability and 25 bps hike still looks like a strong possibility, 50 bps is off the table.

Meanwhile, Srinivasan Varadarajan, Non-Executive Chairman of Union Bank of India said that the central banks are playing a critical role in safeguarding the financial system. They are providing backstops to ensure that things don't worsen from here. Their measures are aimed at preventing a complete collapse of the market.

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