The US Federal Reserve (US Fed) on Wednesday announced its move to keep the interest rate cuts unchanged in 4.25-4.50% range in its first major decision under President Donald Trump’s second term. The decision was “unanimous”. The decision was made after US Fed’s meeting. Last year, the central bank of the USA had cut the benchmark rate 3 times in a row. Furthermore, the rate cut got started in September, marking the first decrease in four years.
The central bank’s decision may cause tension with the new President, who believes he should have a say in the bank’s policies.
The latest announcement comes at a time when China’s DeepSeek has made a big impact on US markets, causing losses for major American companies like Nvidia.
The Federal Reserve has given the job market a thumbs up, calling it “solid” with low unemployment rates. However, inflation remains a concern, described as “somewhat elevated”. This mixed assessment suggests the Fed might slow down on cutting interest rates in the coming months.
What US Fed Rate Cut Means For India’s Economy?
The Reserve Bank of India (RBI) might cut interest rates, making borrowing cheaper in India. Furthermore, the rate cut may weaken the US dollar, causing the Indian Rupee to rise in terms of value. However, a stable rate can lead to larger dollar-rupee divide. A stronger rupee makes imports cheaper, which helps to lower down the inflation in India.
When the US cuts interest rates, investors find investments in the US less appealing. However, now investments can be re-shifted to the world’s largest economy. Notably, the increased foreign investment can boost up the stock market sentiments, leading to a rally.
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