Commodity prices to remain volatile with mild negative bias in immediate run

Demand concerns due to recession fears may see retail inflation dip. All eyes will be on the US Fed’s next move on policy change.

In its latest policy meeting, the US Federal Reserve raised its interest rates by 75 basis points (bps) for a second straight month. The cumulative increase of 150 bps in the June-July period, the steepest rise since the early 1980s, lifted the US target range of federal fund rates to 1.25 percent to 2.5 percent

The US economy is facing its highest rate of inflation in 40 years. In June, consumer prices soared 9.1 percent, their biggest annual increase since 1981. This was thanks to surging prices for energy, food, and rent.

Like the US Federal Reserve, central banks across the world are engaged in the battle against surging inflation. Recently, the European Central Bank (ECB) surprisingly hiked its rate by a half-point. It was its first rate-hike in more than a decade. Earlier, the Reserve Bank of India (RBI) increased its repo rate to 4.9 percent, and the Bank of Canada hiked rates by a full percentage point