By Ruma Dubey

With less than a week to go for the US elections, no one in their right minds would have even remotely expected the US Federal Reserve to do anything worthwhile today. The markets around the world – equity, forex, gold and bonds; all are showing volatile behavior with an overwhelming sense of uncertainty. Thus it came as no surprise to see the Fed do nothing today; continuing to hold to its dear near-zero interest rates.

So when the meet today was not about the rates at all, what were we all staying up in the night and waiting for this non-event? Apart from the compulsive need to report, the need was to know if we could get a heads-up on what lay ahead for the December meet. We wanted to know if the Fed, through any statement conveys that December could be month when rates could be hiked.

No such covert message came through. In fact it once again gave wind to more speculation. If last time, out of the 10 members of FOMC, 7 had voted for a hold and three had dissented, this time around 8 voted for a hold and 2 for hike. Maybe that one voice changing over was on account of the imminent election round-the-corner but as such there was nothing to indicate that December was a sure decision making month.

It looks like we have been speculating about a probable Fed rate hike for months now; that too a measly 0.25%. It has become quite routine to report back saying that it was a non-event. As one friend very rightly put it, “It's like some of us are cautiously watching some sleeping beast who may or may not be 'good' or 'bad'.  While we wait, some of us tell ghost stories.”

Either we all are getting older by the day or the market yardsticks have changed drastically. There was a time when what mattered were the earnings, topline growth, valuation, Pes, GDP growth. But post-2008 meltdown, it seems to be less about these relevant measures, with all focus and energy on what our Indian or Japanese or American central banker might do – not now but in the near future.

As we said earlier, nothing of relevance will happen unless and until the new USA President is elected; till then we will remain on tenterhooks, holding on to scraps of grass to stay afloat. But the moot question is – what happens after 8^th? Have we got a lineup of ‘things-to-look-forward to’? Yes, a Trump win (God forbid) or a Clinton win could decide where money will go – Trump would mean more into gold and Clinton would mean some into gold and some into equity.

For us here in India, this Fed meet is over and done with, the market will pay no heed, with focus only on US elections. On a micro level, tomorrow we have results of Ambuja Cement, Berger Paints, TTK Prestige, and many more such midcap companies to look forward to. Yes, tomorrow evening Bank of England will also announce its interest rate decision but once again, no material impact on Indian markets.

Highlights of the Fed statement:

• The committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives.
• The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.
• The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.