The US central bank can take a big decision on the Fed Rate cut interest rates. The effect of which will be seen not only on America, but also on India. Experts say that the deduction in Fed’s interest rates will directly affect the Indian rupee, stock market, petrol and diesel prices and even foreign investment (FII). This is considered a relief news for investors, but it will also affect the pockets of common people. Now the biggest question is which areas will benefit or harm in India?
1. Effect on dollars and rupee
Experts say that when the US reduces interest rates, the dollar is slightly lower. This directly benefit the currencies of emerging economies like rupee. Import (oil, gold, electronics) may be slightly cheaper due to the strengthening of the rupee.
2. Foreign Investment (FII flow)
Low interest rates mean that American investors will invest in markets like India for better returns. This will speed up the stock market and will also bring money in the bond market.
3. Crude oil and goods
Due to increasing inflation, the prices of crude oil, gold-silver and other items can remain high. This will be a matter of concern for big importing countries like India. If the oil becomes expensive, the petrol-diesel and transportation costs will increase, which can cause pressure on inflation again.
4. Dilemma of Reserve Bank of India
If the fed cuts interest rates, the pressure on RBI to cut interest rates will also increase. But inflation (especially in food and beverages) is also high in India. In such a situation, RBI will have to balance. For example, development will help if the RBI reduces interest rates and if the rates remain stable then inflation will be under control.
5. Impact on common man
If the investment flow increases, the stock market may rise. If the rupee is strong, imported items (mobile, electronics, fuels) may be a bit cheap. But if oil and international prices continue to rise, petrol-diesel can be expensive.
Fed can cut 25 basis points
According to US media, the US central bank Federal Reserve can deduct the interest rate of 25 basis points (0.25%) on 17 September. After which the interest rate will be between 4 percent to 4.25 percent.
Inflation will decrease in America, debt can be cheap
Experts believe that interest rate cuts will reduce inflation in the US and loans may become cheap. According to the report, Fed had cut interest rates three times in 2024 last year i.e. 2024.
There was a reduction of 0.25% in December, 0.50% in November and then 0.25% in September. Since then interest rates are between 4.25% to 4.50%.
Explain that the US central bank Federal Reserve Rate decides how much interest the bank will take interest on each other on loans.
