US Fed Rate Cut: The US Federal Reserve on Wednesday cut interest rates by 25 basis points, or 0.25%. Following this decision, the policy rate now falls within the range of 4 to 4.25%, compared to the previous range of 4.25 to 4.50%. This is the first rate cut this year. US President Donald Trump had been continuously pressuring the Fed to cut interest rates.
Experts believe this move could impact not only the US but also Asian markets and the Indian stock market. The US Fed’s decision comes amid the Trump administration’s tariffs and rising inflation, which has also led to a slowdown in economic activity and a slowdown in employment.
Why did America take the decision to cut rates?
The two-day Federal Reserve meeting, chaired by US Fed Chairman Jerome Powell, concluded with a decision that economic activity in the US economy remains sluggish and employment growth appears to be slowing. The Fed noted that inflation has increased somewhat and remains elevated. Furthermore, the Fed indicated that further policy rate cuts are likely by the end of the year.
Fed Governor Stephen Miron was in favor of a 50 basis point cut, but Chairman Jerome Powell decided on a 25 bps cut, saying monetary decisions would be taken based on incoming economic data and circumstances.
Impact on US stock markets
US stock markets rose following the rate cut decision. The Dow Futures rose 125.30 points to close at 46,143.60, the Dow Jones Industrial Average gained 260.42 points to close at 46,039.33, and the S&P rose 28 points to 6,698.75. Asian markets also rose on Thursday. Major markets, including the Nifty, Nikkei, and Kospi, saw gains.
Impact on Indian markets
Any financial developments in the US are immediately reflected in the Indian stock markets. The US Fed’s rate cut and expectations of further rate cuts are expected to boost Indian stock markets on Thursday. Experts say investors can take advantage of this opportunity to invest in the stock market, but it’s important to keep an eye on economic indicators.
