Sensex rallies over 200 points; Nifty near 7,850

The BSE Mid-cap Index is trading up 1.48% at 10,902, whereas BSE Small-cap Index is trading up 1.65% at 11,551. Some buying activity is seen in pharma, banking, capital goods, IT and metal sectors, while auto, oil & gas and energy sectors are showing weakness on BSE.

 At 3:08 PM, the S&P BSE Sensex is trading at 25,787 up 292 points, while NSE Nifty is trading at 7,833 up 82 points.

The BSE Mid-cap Index is trading up 1.48% at 10,902, whereas BSE Small-cap Index is trading up 1.65% at 11,551.

Some buying activity is seen in pharma, banking, capital goods, IT and metal sectors, while auto, oil & gas and energy sectors are showing weakness on BSE.

Tata Steel, Hindalco, Sun Pharma, Hero MotoCorp, Vedanta and SBI are among the gainers, whereas ONGC, Axis Bank, Lupin, Maruti Suzuki, ITC, BHEL and M&M are losing sheen on BSE.

The INDIA VIX was down 11.17% at 14.8575. Out of 1,766 stocks traded on the NSE,422 declined and 1,073 advanced today.

A total of 38 stocks registered a fresh 52-week high in trades today, while 12 stocks touched a new 52-week low on the NSE.

Indian Rupee opened higher by 11 paise at 66.62/$ in early trade on Thursday, as against the previous close of 66.73/$. The US Fed delivered a rate hike of 25 basis points, accompanied with an accommodative policy statement. Fed stated that the improvement in economic conditions warrant a rate hike after a gap of literally a decade. Rise in consumer spending, strength in housing market and business fixed investment reflects improving confidence in the economy.

Suzlon Energy rally 2.2% to Rs. 20.95 on BSE.  Dilip Shanghvi and the promoters of Suzlon will make an open offer to acquire a 26 per cent stake in the wind turbine maker for Rs. 2,837 crore. Shanghvi-controlled entities along with Tulsi Tanti and other promoters of Suzlon would make the open offer to the shareholders for purchasing more than 157.64 crore shares, according to a filing to the BSE.

Golden Tobacco gained 1% to Rs.47. Dalmia Group company Golden Tobacco said that it has been issued a Rs. 121.55 crore demand notice by the central excise department. The Office of Deputy Commissioner of Central Excise, Guwahati vide its letter dated December 8, 2015 in the matter of NETCO has issued a demand notice to the company for Rs. 121.55 crore which is recoverable from NETCO only, Golden Tobacco said in a BSE filing.

eClerx Services jumped 2.7% to Rs.1,436 on BSE.The company has fixed record date as December 18 for the purpose of ascertaining entitlement for Bonus Equity shares in the ratio of 1 Bonus Equity Share of Rs. 10/- each for every 3 Equity Shares of Rs. 10/- each held in the Company.

Deccan Gold Mines announced that Deccan Exploration Services Private Limited (DESPL), its subsidiary plans to commence Core and RC Drilling at Ganajur-Karajgi PL Block located in Haveri District, Mangalagatti PL Block located in Dharwad District in the State of Karnataka by third week of December, 2015.

Shares of NTPC Industries were trading higher 1% at Rs. 134.50 on BSE today. Around 30.7 lakh shares were traded in a single block at Rs. 135 on the BSE.

Aurobindo Pharma Limited announced that the company has received final approval from the US Food & Drug Administration (USFDA) to manufacture and market Methylprednisolone Sodium Succinate Injection USP, 40 mg/vial, 125 mg/vial, 500 mg/vial, and 2 g/vial. The approved ANDA is bioequivalent and therapeutically equivalent to the reference listed drug product (RLD) Solu-Medrol, of Pharmacia & Upjohn Co.

Heritage Foods jumped 4% to Rs.561.50 on BSE. The board has approved to set up 2.1MW Wind Power Project in Andhra Pradesh for Captive Consumption. 

GST delay will hurt India’s GDP by 1.5%-2%

An early implementation of the GST would have helped India move on to a high growth path. Also, the impact of the GST will not be felt overnight. If GST is rolled out by April 2016 (which seems tough now), then its impact will be visible only in 2018

Industry and foreign investors seems to be losing their patience now. The unnecessary delay in Goods and Services Tax (GST) due to opposition’s rhetoric is hurting Indian economy more than the political party in power. The sad part is that the opposition parties do not understand this simple fact.

 
An early implementation of the GST would have helped India move on to a high growth path. Also, the impact of the GST will not be felt overnight. If GST is rolled out by April 2016 (which seems tough now), then its impact will be visible only in 2018. Hence quicker the rollout, better it is. There is no doubt about the success of GST. World over, it is the standard way of taxation. It unifies a complex tax system and since it is simpler to implement, it creates a broader tax base and efficient taxation too.
 
But GST alone will not help India. GST needs to be supported by other factors too that help increase GST benefits by acting as catalysts. Though factors like new Companies Act, electricity situation have improved, India’s economy is still waiting to see better days when it comes to showstoppers like getting construction permits, enforcing contracts, etc. If these factors are also taken care off and GST is rolled out in next year, then it will help give India the credibility it awaits and also help improve its business rankings.
 
GST is expected to increase government revenue too as with just one authority managing taxes, collections would go up and slippages will be lesser. It will also help poor states as tax will be charged on consumption basis and not manufacturing. This will bring much-needed revenues for poor states that did not earn much from taxing manufacturing sectors.
 
Economists have long been explaining the benefits of GST and how it can help India create more jobs, increase revenue as well as promote domestic manufacturing. But if opposition does not keep its political agenda aside, it will hurt the economy in long run and opposition can also be accused of not performing its duties.

Fed uncertainty ends! Will financial markets now move forward?

The Fed has raised key rates by 0.25% and has also signaled its intent to continue raising rates till rates reach 1.37% by 2016-end.

Lower US GDP growth projections and inflation notwithstanding, Federal Reserve (Fed) has decided to finally end its 7-year zero rate policy. The Fed has raised key rates by 0.25% and has also signaled its intent to continue raising rates till rates reach 1.37% by 2016-end. If analysts’ estimates about impact of rate hikes are to be believed, then the US government could be paying an additional $3 trillion in interest over the next 10 years.

But it will be wrong to expect any immediate effect of this rate hike. It takes time for policy actions to show their affect and impact future economic outcomes. Though Fed has made it clear that it wants to raise rates further, the actual path taken by the rates in future will depend on the immediate economic scenario at the time of Fed meets.
 
The rate hike has also brought an end to the prevailing uncertainty about Fed’s decisions and how it will impact rest of the world. Experts feel that long-term treasuries and corporate bonds will witness renewed interests. As for the US trading partners, the countries that are large exporters to US and have low domestic inflation are expected to benefit from rate hike. Commodities are expected to be largely unaffected from this small rate cut. But if rates continue to rise further, then it will start having visible impact on commodity prices as well.
 
Markets do not seem to be surprised by Fed’s move and in essence, had resorted to their own ways of tightening the expected monetary policies. Indian markets have had already been through big sellings by foreign investors. Since selloff was primarily in large-cap stocks where foreign investors had large holdings, major indices have been falling quite steeply in recent months. But with uncertainty over, investors will take a fresh look at emerging markets, which still offer better return potential than current Fed-hiked US rates.

HUL acquires 'Indulekha' brand

The deal is valued at Rs. 330 crore.

HUL has signed an agreement with Mosons Group for acquisition of its flagship 'Indulekha' brand. The deal is valued at Rs. 330 crore.

Hindustan Unilever Ltd is currently trading at Rs. 857.55, up by Rs. 3.8 or 0.45% from its previous closing of Rs. 853.75 on the BSE.

The scrip opened at Rs. 860 and has touched a high and low of Rs. 860 and Rs. 850.5 respectively. So far 924476(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 184740.47 crore.

The BSE group 'A' stock of face value Rs. 1 has touched a 52 week high of Rs. 979 on 11-Mar-2015 and a 52 week low of Rs. 744 on 26-Dec-2014. Last one week high and low of the scrip stood at Rs. 867.55 and Rs. 812.05 respectively.

The promoters holding in the company stood at 67.21 % while Institutions and Non-Institutions held 18.72 % and 14.06 % respectively.

The stock is currently trading below its 200 DMA.

Oil ministry appoints one man committee to look into RIL-ONGC dispute

The oil ministry has appointed Ajit Prakash Shah, former chief justice of the Delhi High Court to look into the charges of siphoning of Oil by RIL from ONGC’s block in the Krishna-Godavari basin to RIL’s adjoining reservoir.

Two weeks after US-based consultant DeGolyer and Mac Naughton (D&M) submitted its final report, the oil ministry has appointed Ajit Prakash Shah, former chief justice of the Delhi High Court  to look into the charges of siphoning of Oil by RIL from ONGC’s block in the Krishna-Godavari basin to RIL’s adjoining reservoir.

The commission will  thoroughly investigate the D&M report and will look into legal, financial and contractual provision including those contained in oilfields regulations and development act, petroleum and natural gas rules and concerned production sharing contracts (PSC) and other laws related to oil and petroleum  and recommend action to be taken by the government.

Deccan Gold Mines begins Drilling operations in Karnataka

We will be working closely with South West Pinnacle and look forward to reporting the drilling results to shareholders over the next few months, Sandeep Lakhwara said

Deccan Gold Mines announced that Deccan Exploration Services Private Limited (DESPL), its subsidiary plans to commence Core and RC Drilling at Ganajur-Karajgi PL Block located in Haveri District, Mangalagatti PL Block located in Dharwad District in the State of Karnataka by third week of December, 2015.

The proposed drilling program would be carried out by South West Pinnacle Exploration Private Limited, India (South West Pinnacle) with whom DESPL has entered into a Drilling Services Agreement.  South West Pinnacle is a premier exploration company with extensive experience in rendering exploration services involving exploratory drilling and report preparation and offers drilling rig,equipment and accessories along with experienced drilling and support crew.

DESPL has proposed to undertake the drilling program in a phased manner including 5000 - 7000 meters in Phase-I.  DESPL has also proposed to undertake around 5000 meters of RC and Diamond Core Drilling in Mangalagatti PL Block after the execution of the PL.  South West Pinnacle will  be  mobilizing 4-5 drill rigs to Ganajur and Mangalagatti for  undertak ing the proposed drilling program in a time bound manner and the first of the rigs has already reached Ganajur today .

Commenting on the proposed drilling program, Sandeep Lakhwara, Managing Director of DGML said, "This is a very important step for DESPL in its transformation from an exploration company to becoming ultimately one of the first new gold producing companies in India. We will be working closely with South West Pinnacle and look forward to reporting the drilling results to shareholders over the next few months. The main focus of this drilling program would be to increase the overall gold resource in Ganajur Main Gold deposit which at present has been estimated as 308,000 ozs of gold. Apart from this, DESPL also plans to drill the adjoining satellite prospects which look very promising in terms of gold mineralization.

The drilling program at Mangalagatti will commence once we receive the approval of the State Government of Karnataka for execution of the PL and we look forward to receiving the approval in the near future."

Deccan Gold Mines Ltd is currently trading at Rs. 32.65, up by Rs. 2.95 or 9.93% from its previous closing of Rs. 29.7 on the BSE.

The scrip opened at Rs. 30.1 and has touched a high and low of Rs. 32.65 and Rs. 29.55 respectively. So far 225898(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 263.82 crore.

The BSE group 'B' stock of face value Rs. 1 has touched a 52 week high of Rs. 71.38 on 05-Aug-2015 and a 52 week low of Rs. 21.3 on 23-Mar-2015. Last one week high and low of the scrip stood at Rs. 30.35 and Rs. 25.4 respectively.

The promoters holding in the company stood at 29.27 % while Institutions and Non-Institutions held 7 % and 63.73 % respectively.

The stock is currently trading below its 200 DMA.

Bhushan steel up by 1%; Sahibad plant allowed to operate for 3 weeks

National Green Tribunal has allowed Bhushan Steel and Strips Sahibabad plant in Uttar Pradesh, which had been ordered to be closed for polluting the environment, to operate for three weeks

Bhushan Steel stock was up by 1% at Rs. 45. Report says that  National Green Tribunal allowed Bhushan Steel and Strips Sahibabad plant in Uttar Pradesh, which had been ordered to be closed for polluting the environment, to operate for three weeks. 

The scrip opened at Rs. 45.35 and has touched a high and low of Rs. 45.9 and Rs. 44.6 respectively. So far 268242(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 1011.39 crore.

The BSE group 'A' stock of face value Rs. 2 has touched a 52 week high of Rs. 103.3 on 03-Mar-2015 and a 52 week low of Rs. 40.5 on 09-Nov-2015. Last one week high and low of the scrip stood at Rs. 49.3 and Rs. 41.9 respectively.

The promoters holding in the company stood at 59.05 % while Institutions and Non-Institutions held 4.79 % and 36.16 % respectively.

The stock is currently trading below its 200 DMA.

How the Fed rate hike impacts Asia Pacific

Thomas Rookmaaker (Director, Sovereign Ratings, Fitch Ratings) said “India is not immune to potential general emerging market jitters related to the Fed lift-off, but it is better placed than many of its peers for a number of reasons. First, its external balances have significantly improved since mid-2013, with foreign exchange reserves rising by some USD65bn to USD353bn as of November 2015 and the current account deficit narrowing.

Andrew Colquhoun (Head of Asia-Pacific Sovereigns, Fitch Ratings) said “The rate rise was well-signalled and in line with Fitch’s expectation. The real uncertainty remains how quickly rates rise, and to what peak. There is still a significant wedge between where the Fed is telling us it sees rates going and what the market is pricing in. An out-turn closer to Fed guidance would be a substantial shock for a region where private sector debt levels have risen rapidly and where capital flows have already started to reverse. This uncertainty puts a premium on credible and coherent policy responses by authorities in buffering sovereign credit profiles.” 
​
​How the Fed rate hike impacts India?
 
Thomas Rookmaaker (Director, Sovereign Ratings, Fitch Ratings) said: “India is not immune to potential general emerging market jitters related to the Fed lift-off, but it is better placed than many of its peers for a number of reasons. First, its external balances have significantly improved since mid-2013, with foreign exchange reserves rising by some USD65bn to USD353bn as of November 2015 and the current account deficit narrowing. Second, India is less dependent than several of its peers on commodity exports, and has thus not been negatively affected by the global rout in commodity prices. Third, only a small part of India’s sovereign debt is held by foreigners or is denominated in foreign currency. Fourth, India’s favourable economic growth outlook makes India relatively attractive for foreign investors.”
 
How the Fed rate hike impacts China?
 
Andrew Colquhoun (Head of Asia-Pacific Sovereigns, Fitch Ratings) said:
“The onset of sustained capital outflows since 2014 has added an external dimension to longer-standing concerns over the consequences of the rapid rise in debt across the economy since 2010. Lower Chinese rates might help to shore up corporate balance sheets and domestic demand, but would risk spurring capital outflows seeking rising US rates. The key question for China in 2016 could be whether the country can reconcile potentially conflicting imperatives on domestic and external financial stability.”
 
How the Fed rate hike impacts Hong Kong?
 
Andrew Fennell (Associate Director, Sovereign Ratings, Fitch Ratings) said: “Fitch does not expect higher US rates to materially impact Hong Kong’s sovereign credit profile. The territory has implemented seven rounds of macro-prudential tightening measures since 2009 to safeguard the financial sector from a property market correction, with loan-to-value ratios on residential mortgages averaging about 55% since 2012.  Hong Kong also has significant fiscal buffers in place, with fiscal reserves equivalent to 36% of GDP.  While a faster than expected rise in US interest rates could have spillover effects to growth and private consumption, Fitch considers Hong Kong’s large banking sector exposures to mainland China as the biggest risk to its sovereign credit profile. “ 
​
How the Fed rate hike impacts South Korea​?​
 
Thomas Rookmaaker (Director, Sovereign Ratings, Fitch Ratings) said: “Korea is less vulnerable than many other countries in the region to external financing risk, for instance emanating from speculation surrounding the Fed policy. It benefits from persistent current account surpluses, high foreign reserves and a net external asset position. At the ‘AA-’ rating level a number of peers have even stronger external balance sheets, for example, those driven by large oil-related foreign currency inflows, but Korea is less dependent on commodity exports. Korea seems more vulnerable to a scenario of a severe slowdown in China. Exports traditionally play an important role in the Korean economy and already get hit substantially by the current drop in external demand. Bilateral trade with China accounts for roughly 25% of total trade and the trade with other emerging Asian countries for another 25%.”
 
​How the Fed rate hike impacts Philippines​?

Mervyn Tang (Associate Director, Sovereign Ratings, Fitch Ratings) said: “Fitch maintains a Positive Outlook on the ‘BBB-‘ rating of the Philippines. Fitch views the external finances of Philippines as a key credit strength. In Fitch’s view, steady current account surpluses since 2002 have led to a large build-up in foreign exchange reserves and that makes the Philippines more resilient than many other emerging market economies to any shift in global investor sentiment, following the Fed rate hike.”

Fed hike positive for Bonds and Rupee: India Ratings

Ind-Ra believes the rupee is likely to gain in today’s trading session and consolidate in the 66.3-66.6/USD range. Its better placed macro fundamentals indicate that the rupee could continue outperforming both in absolute and relative terms.

The US Federal Reserve’s decision to formally mark the end of its unconventional Monetary Policy is a welcome sign of normalisation, which will augur well for domestic financial markets, India Ratings and Research believes. Specifically, the rates and currency market will stand to gain in the near term; the 10Y benchmark G-sec yield likely to soften around the 7.70% mark with bias towards further softening and the Indian rupee will stabilise between 66.3-66.6/USD during the week. With Fed’s policy normalisation underway, the Reserve Bank of India’s (RBI) focus during the upcoming monetary policy reviews will increasingly shift to domestic parameters- critical being the growth-inflation rhetoric.

For financial markets, with looming uncertainty over the Fed policy path behind, the driver for markets hereon will be more inward focused than external developments’ reliant.

Specifically, the rates market in the near term is likely to stabilise hereon on the back of (1) no supply pressure of G-sec in this fortnight (2) the next tranche of debt limit hike for portfolio investors for both central and state government bonds opening on 1 January 2016 (3) gradual and non-disruptive rate hikes by Fed in 2016 keeping the door open for RBI to ease rates, basis assessment of evolving macro parameters.

The elimination of uncertainty post the Fed event emerges as a major positive for domestic bond market, which has been witnessing foreign outflow. Over November 2015-first week of December 2015, equity outflow stood at around USD1.7bn, while debt outflow totaled USD580m. Incrementally, outflow from India is likely to moderate. Ind-Ra believes future inflow is likely to be more long-term flow than ‘hot’ money. 

In the currency space, we have been highlighting that the rupee is likely to correct from the recent lows of 67/USD to around 66.3-66.6/USD mark (Insert DebtFX link). A dovish rate hike by Fed is likely to be positive for the EMFX space as questions persist not only over the timing of further rate hikes but also on the extent. The first rate hike comes against the backdrop of low inflation (in part, explained by ‘transitory’ pressure of energy prices). The US dollar weakness, consequently, may be an interim phenomenon with subsequent rate hikes likely to shift the orbit of dollar strength outward.

The rupee is likely to emerge as a gainer in near term. Ind-Ra believes the rupee is likely to gain in today’s trading session and consolidate in the 66.3-66.6/USD range. Its better placed macro fundamentals indicate that the rupee could continue outperforming both in absolute and relative terms.

On the ground level, the impact of policy normalisation by Fed is unlikely to have any fundamental shifts in the outlook for the Indian economy. Indian corporate sectors continue to face pressure of excess leverage at a time when growth recovery is protracted, leaving a debt overhang. An appreciation in currency, accompanied by low energy prices, will have a salutary impact on corporate balance sheets. Any meaningful turnaround, however, is likely to be only slow and gradual.

The Fed rate hike needs to be assessed as reasonable confidence US policymakers have on the revival of their domestic growth conditions. While other major economies continue to battle recessionary trends, the US economy’s strength may have positive spillovers for its trading partners.

The stabilisation of external market conditions indeed provide opportune time for domestic policymakers to revive the issues plaguing the corporate sector. They can focus on resolving the problem of stressed assets, creating demand and augmenting the capital expenditure plans.

Narayana Hrudayalaya IPO opens for subscription today

The company recently finalized the allocation of 73,56,988 equity shares at a Price of Rs. 250 (upper end of the Price Band) per Equity Share aggregating to Rs. 184 crore.

Narayana Hrudayalaya Limited IPO opens today. The company recently finalized the allocation of 73,56,988 equity shares at a Price of Rs. 250 (upper end of the Price Band) per Equity Share aggregating to Rs. 184 crore.
 
The  Rs 613 crore IPO opens with a price band of Rs 245-Rs 250. 
 
The Company is proposing, subject to applicable approvals, to make an initial public offer and has filed a Red Herring Prospectus (“RHP”) dated December 08, 2015, with the Registrar of Companies, Bengaluru, Karnataka for an Initial Public Offer of up to 24,523,297 Equity Shares of Face Value of Rs. 10 Each ("Equity Shares") of the Company for cash at a Price Band from Rs. 245 to Rs. 250 per Equity Share including a share premium ("Offer") through an Offer For Sale of up to 6,287,978 Equity Shares by Ashoka Investment Holdings Limited, up to 1,886,455 Equity Shares by Ambadevi Mauritius Holding Limited, up to 12,261,648 Equity Shares by JP Morgan Mauritius Holdings IV Limited (the "Investor Selling Shareholders"), up to 2,043,608 Equity Shares by Dr. Devi Prasad Shetty and up to 2,043,608 Equity Shares by Shakuntala Shetty (the "Promoter Selling Shareholders") (together the "Selling Shareholders") ("Offer for Sale"). The Offer will constitute approximately 12% of the Post-Offer Paid-Up Share Capital.
 
The minimum Bid Lot is for 60 Equity Shares and in multiples of 60 Equity Shares thereafter. The Company and the Selling Shareholders may, in consultation with the BRLMs, consider participation by Anchor Investors. The Anchor Investor shall bid on the Anchor Investor Bidding Date i.e. one Working Day prior to the Bid/Offer Opening Date. The Bid/ Offer will close on December 21, 2015, for all Bidders. The Equity Shares offered through the Offer are proposed to be listed on BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”).
 
The Book Running Lead Managers (“BRLMs”) to the Offer are Axis Capital Limited, IDFC Securities Limited and Jefferies India Private Limited.
 
Founded in 2000 by Promoter, Dr. Devi Prasad Shetty, who has over 30 years of medical experience, including as a cardiac surgeon, the Company is one of the leading private healthcare service providers in India, operating a chain of multispecialty, tertiary and primary healthcare facilities. As of the date of the Red Herring Prospectus, it had a network of 23 hospitals (multispeciality and superspeciality healthcare facilities which provide tertiary care), 8 heart centres (superspeciality units which are set up in a third party hospital) and 24 primary care facilities (including clinics and information centres), across a total of 31 cities, towns and villages in India, with 5,442 operational beds and the potential to reach a capacity of up to 6,602 beds. In FY 2015, the facilities provided care to over 1.97 million patients. Headquartered in Bengaluru, it operates a national network of hospitals in India with a particularly strong presence in the southern state of Karnataka and eastern India, as well as an emerging presence in western and central India. As of September 30, 2015, it had 11,163 employees, which included 344 doctors, 5,587 nurses, 1,996 paramedical staff and 3,236 administrative personnel. Additionally, it had 487 students, which included 469 doctors, 14 paramedics and 4 administrative trainees. Further, it had 1,750 doctors on a consultancy basis (including visiting consultants) engaged in the system

After 9 years, Fed finally hikes interest rates

The US central bank's policy-setting committee raised the range of its benchmark interest rate by a quarter of a per centage point to between 0.25 per cent and 0.50 per cent, ending a lengthy debate about whether the economy was strong enough to withstand higher borrowing costs.

After 9 years, the Federal Reserve has hiked interest rates  indicating that the US economy is in better shape recovering from the damage of the 2007-2009 financial crisis. 

The US central bank's policy-setting committee raised the range of its benchmark interest rate by a quarter of a per centage point to between 0.25 per cent and 0.50 per cent.

Following is the Fed statement: 

After 9 years, Fed finally hikes interest rates

Information received since the Federal Open Market Committee met in October suggests that economic activity has been expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further; however, net exports have been soft. A range of recent labor market indicators, including ongoing job gains and declining unemployment, shows further improvement and confirms that underutilization of labor resources has diminished appreciably since early this year. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; some survey-based measures of longer-term inflation expectations have edged down.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen. Overall, taking into account domestic and international developments, the Committee sees the risks to the outlook for both economic activity and the labor market as balanced. Inflation is expected to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further. The Committee continues to monitor inflation developments closely.

The Committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective. Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent. The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. 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. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Jeffrey M. Lacker; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams.