US Fed outcome to be a non-event; Greek crises to keep markets on tenterhooks: JPM

NEW DELHI: The two-day US Federal Reserve's policy meet that will conclude later in the day is likely to be a non-event for global markets, feels Sunil Garg, Head of International Equity Research at JPMorgan. Instead, it is the ongoing Greece issue that will keep global markets on tenterhooks, the expert believes.

In an interview to ET Now, the expert said that the first interest rate hike by the US Fed is likely to take place in the September policy review.

"The Fed outcome is probably going to be somewhat of a non-event. Our expectation is the probability of rate hike in this meeting is low. We are expecting for a first rate hike to come through in September. So to some extent, it is well flagged."

The JPMorgan analyst said that there will be some nervousness as we head closer into September. Meanwhile, the expert believe that Greek debt issue is more of a short-term issue, which may trigger dis-allocation in the markets.

"The rhetoric on that is clearly stepped up quite substantially over the last few days and there is enough chatter in the market about possible capital controls or even possible defaults. To some extent, the exposure of institutions and banks to Greece has come down," he said.

Garg suggested that one needs to be on the other side of the event to see what the markets will do.

"Greek exit has been talked about now for a very extended period. A fair amount of de-risking has gone on at various levels. But if you were to get into an even like that, it is only fair to say that there will be some dislocation in the markets only because how to handle an exit out of the euro zone or the common currency.

"As there is no precedent, the uncertainty itself will cause dislocation in markets. But the important thing to remember is that this is an event that has been at least in preparation in minds of a lot of people who have got exposure in Greece for some time. That said, there is definitely going to be heightened volatility and dislocation around it, if you do get a negative outcome." he added.