A big news has come from America. The Federal Reserve has decided on its policy rates, as was expected. The US Fed has announced a cut in interest rates. This time, US policy rates have been cut by 25 basis points or 0.25%. After this cut, US interest rates are now in the range of 3.75% to 4%. Earlier, in September, the US Federal Reserve had cut rates by a similar number. A statement issued by the Fed said that this step has been taken to stabilize the US economy.
Rates cut for the second consecutive time this year
This is the second consecutive cut in policy rates by the Federal Reserve in 2025. The Fed cut the overnight benchmark rate to a target range of 3.75%-4.00%. Earlier, in September, the Fed had cut interest rates by 25 basis points, taking them to the range of 4-4.25%. The decision to cut rates in the Fed meeting was taken by a 10-2 vote. One member abstained from cutting interest rates, while another proposed a cut of 50 basis points.
Powell remained silent on further interest rate cuts
Fed Chairman Jerome Powell had hinted at further interest rate cuts when he announced interest rate cuts in September. However, after the announcement of interest rate cut, he did not give any indication of cutting interest rates in the December meeting. He said the committee had completely different ideas for the December meeting. It is noteworthy that the next meeting on policy rates of the US Fed will be held in December.
What’s in the Fed’s statement?
As expected, in a statement issued after cutting interest rates, the Fed said that recent signs suggest that US economic activity is slowing down. So far in 2025, employment growth has slowed, while the unemployment rate has increased. However, its level has been lower than in August. Regarding inflation, it said it had increased at the beginning of the year and is still somewhat high. Therefore, it was decided to cut interest rates to balance these risks and stabilize the economy.
Impact on Indian market!
Any financial development in America has an impact in India also. The Indian stock market often sees fluctuations after the Fed’s decision to cut interest rates. After the cut in interest rates on Wednesday, a mixed trend is being seen in Asian markets.
Hong Kong’s Hang Seng and South Korea’s Kospi are in the green, while Nikkei is trading in the red. Nifty also saw a rise in early trading, which is a sign of bullish trend in the Indian market. Sensex closed with a gain of 368.97 points, while Nifty closed with a gain of 117 points.