US Fed Rate Cut: Federal Reserve reduced interest rates for the third time in a row, announced a cut of 0.25 percent – us fed rate cut federal reserve reduced interest rates for the third time in a row announced a cut of 0 25 percent

US Fed Rate Cut: The US central bank Federal Reserve has announced the third consecutive cut in interest rates. As expected, interest rates have been cut by 25 basis points in December. The Federal Reserve took this decision in the Federal Open Market Committee (FOMC) meeting. After this cut, the interest rate has come down from 4.5%-4.75% to the target range of 4.25%-4.5%. Before this, interest rates were reduced by 50 basis points in September 2024. This was the first cut in the last four years. Apart from this, interest rates were also reduced by 0.25 percent in November.

American stock market decline

After this decision of the Federal Reserve, there is a decline in the American stock market. At the time of writing, Dow Jones is trading 0.08 percent down at the level of 43,418.85. Apart from this, a decline of 0.36 percent is seen in S&P 500 and 0.29 percent decline in Nasdaq.

Cutting interest rates will reduce interest on loans like mortgages, auto loans, and credit cards, which may provide relief to consumers. Experts believe that after the big interest rate cut made by the Fed in 2024, the pace of rate cuts may slow down in 2025. This means that American citizens will get some relief, but this relief will not be too much, because interest rates will be cut gradually.

Let us tell you that in 2022, inflation in America had reached 7.2 percent, which was the highest rate in 40 years. To control this, the Fed raised interest rates to very high levels. Now in 2024, inflation has come down to a much lower level. Inflation has come down to 2.3% in October 2024, much lower than the peak of 7.2%. After success in controlling inflation, many Fed officials believe that interest rates should no longer be kept so high.

Indian market has been declining for the last three sessions

India’s stock market has been falling for three sessions and the Nifty has fallen by nearly 600 points since Monday. Cautious investors booked profits after a sharp rise ahead of the US Federal Reserve’s policy announcement. After registering a sharp rise of 6.1 per cent from the low of late November, NSE Nifty has now declined by 2.5 per cent since Friday’s closing.

Kunal Rambhiya, fund manager and trading strategist at The Streets, said the recent decline in the market was due to profit-booking after a sharp recovery of 6-7 per cent in the NSE index from the November 21 low. He said such corrections, which account for about 40 per cent of the rally, are common before big announcements like the US Fed decision. After the sharp rise, investors have become cautious. They prefer to wait on the sidelines.

What will be the impact of rate cut on the market?

According to Kunal Rambhiya, due to rate cut, the market may remain in sideways consolidation with positive trend. He had said before the rate cut, “If the Federal Reserve cuts the interest rates by 25 basis points, there will not be much movement in the market because the market has already anticipated it. But if there is no change in the interest rates. If it does, Nifty may see another 3 to 4% decline.”

Bethany said that the most important statement will be the statement of Federal Reserve Chairman Jerome Powell. The market would like to know what their stance will be regarding interest rate cuts in 2025. If he hints at stopping or slowing down the rate cuts, it will further accelerate the market decline. On the other hand, if he adopts a liberal stance and gives good signals then we may see a Christmas rally in the market. However, Bethany also said that the Federal Reserve’s decision will not have any impact on the market in the medium to long term.

Fed’s decision will affect RBI

Experts say that the Federal Reserve’s decision to reduce interest rates will impact the RBI in India. RBI did not change the interest rate for the 11th consecutive time in the beginning of December. The repo rate remains at 6.5 percent. It is now believed that RBI may reduce interest rates in its next monetary policy in February. RBI has said that its eyes are on retail inflation. He will take care of retail inflation before reducing interest rates. Experts say that if there is a decline in retail inflation in December and January, then RBI can reduce the interest rate by at least 25 basis points in February.