Sticky inflation clouds rate outlook, but AI and earnings keep markets resilient: Santosh Rao

Santosh Rao told ET Now that sticky US inflation has raised the probability of another Federal Reserve rate hike this year, though strong AI demand, expected EPS growth of over 20% for Q2 and full year, and a broadening equity rally continue to underpin markets. He noted valuations remain elevated but are justified by robust earnings, and cautioned that a strengthening dollar could weigh on emerging markets and commodities. Geopolitical risks in the Middle East were flagged as the biggest near-term threat to the market outlook.