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US Fed Meeting LIVE: US Fed Chairman Jerome Powell is scheduled to address the media at 1:00 am IST.
US Federal Reserve Chair Jerome Powell.
US Fed Meeting LIVE: The much-awaited US Federal Reserve meeting is here. The American central bank is set to announce its latest monetary policy at 12:30 am, and it is expected to cut the key interest rates by 25 basis points. Following this, US Fed Chairman Jerome Powell is scheduled to address the media at 1:00 am IST.
The dollar index is trading lower by 0.64 per cent at 104.41 ahead of the US policy. However, Dow Jones was trading lower by 0.05 per cent, while the Nasdaq was up by 1.27 per cent. Gold prices were up by 1.41 per cent in New York.
This is the first US monetary policy after Donald Trump’s return to power as the president of the country. It is significant as the policy comes against the backdrop of Trump’s proposals like 10% tariff on all imports and higher taxes on Chinese goods, among others, that are expected to boost inflation.
The US Federal Reserve in its previous policy in September cut its key Federal Funds rates by a significant 50 basis points (bps) to 4.75-5 per cent, to push economic growth.
This rate cut, which came after a gap of four years, was only the first in a series of US Fed rate cuts that will extend into 2026. In its dot plot, the US Fed in September 2024 had projected 2.5 percentage points (pp) interest rate cuts by the end of 2026, including the 0.5-pp reduction announced in September.
The US central bank is committed to supporting maximum employment and returning inflation to its 2 per cent objective.
The US Fed often cuts rates to boost a sluggish economy and a weak job market by encouraging more borrowing and spending. But the economy is growing briskly, and the unemployment rate is a low 4.1 per cent.
The American economy grew at a solid annual rate of just below 3% over the past six months, while consumer spending — fueled by higher-income shoppers — rose strongly in the July-September quarter.
In September, inflation dropped to 2.4%, barely above the Fed’s 2% target and equal to its level in 2018.
When inflation spiked to a four-decade high of 9.1% in June 2022, the Fed proceeded to raise rates 11 times — ultimately sending its key rate to about 5.3%, also the highest in four decades.
Impact on Indian Markets?
Even as the Indian equities markets are in a downturn mode, a rate cut is expected to give a signal to investors that the global cues will remain favourable for equities markets amid increased spending.
“Investors are now shifting their attention to the upcoming Fed policy meeting and domestic public outlay, which are anticipated to offer more insight into the future trade path,” said Vinod Nair, head of research, Geojit Financial Services.
