US Fed Chair Jerome Powell.
Follow live updates from the US Fed Meeting September 2024 as the FOMC announces its interest rate decision. Get real-time insights on how Jerome Powell’s remarks impact global and India markets.
US Fed Meeting LIVE Updates: The US Federal Reserve is expected to cut interest rates by 25-50 basis points. The two-day meeting of the Federal Open Market Committee (FOMC), the rate-setting authority in the US, is set to conclude on Wednesday. US Fed Chair Jerome Powell will announce the much-awaited decision and address the media at 11:30 pm IST today.
US equity indices Dow 30 and Nasdaq were trading marginally up by 0.09 per cent and 0.14 per cent, respectively, ahead of the US monetary policy announcement.
The recent economic releases from the US do not suggest a super-sized rate reduction but signs of waning economic activity could push the US central bank to act aggressively to support the economy. However, fed funds futures were pricing in a better than 60 per cent chance the Fed cuts by 50 bps, up from just nearly 15 per cent a year ago.
A basis point is 100th of a percentage point.
This rate cut, which will come after a gap of four years, is expected to be only the first in a series of US Fed rate cuts that will extend into 2025. The last interest rate cut in the US took place on March 15, 2020.
The US central bank held the interest rates steady 11 times for the past one year since July 2023. Before that, between March 2022 and July 2023, the US Federal Reserve raised the interest rates by 525 basis points to control inflation, which hit a multi-decade high amid the Ukraine-Russia war and COVID restrictions.
Last month, Chair Jerome Powell made clear in a high-profile speech in Jackson Hole, Wyoming, that Fed officials feel confident that inflation has largely been defeated. It has plummeted from a peak of 9.1% in June 2022 to 2.5% last month, not far above the Fed’s 2% target.
US Fed Rate Cut: How Will It Impact Indian Stock Market, Gold Prices?
Impact On Stocks: Over time, US Fed rate cuts will lower borrowing costs for mortgages, auto loans and credit cards, as well as for business loans. Business spending could grow, and so could stock prices in the US. Companies and consumers could refinance loans into lower-rate debt. The higher spending is expected to boost the US economy, thus impacting the Indian markets positively.
Impact On Gold Prices: A cut in rate generally tends to support higher gold prices due to factors like lower opportunity costs, a weaker dollar, inflation concerns and a shift in market sentiment. However, actual price behaviour may be uncertain and unstable because gold prices are subject to factors far beyond the reach of the US Federal Reserve.
At present, gold prices in the international market are hovering near their lifetime highs due to demand optimism amid surging geopolitical tensions, feeble global growth outlook and hopes of a US rate cut.
