US Fed meeting 2025: The US Federal Reserve, on Wednesday, announced a 25 bps rate cut in its benchmark interest rate to a range of 4–4.25 per cent. The decision marks the beginning of a monetary easing cycle designed to support a slowing labor market, despite persistent inflation.
The Fed noted that future policy moves will hinge on economic data, the broader outlook, and risk assessments. It also highlighted that growth weakened in the first half of the year and job creation has cooled, though inflationary pressures remain elevated.
Looking forward, policymakers signaled the likelihood of two additional rate cuts this year totaling 50 basis points, followed by one cut in 2026 and another in 2027.
“The FOMC cut the benchmark interest rate by 25 bps as widely anticipated. The policy statement emphasised a shift in labour market conditions, noting slower job gains, an uptick in the unemployment rate, and increased downside risks to employment, in contrast to “solid labour market conditions” in the July policy meeting. Importantly, the Fed dot plot indicated two more rate cuts in the ongoing calendar year, taking the median policy rate for 2025 to 3.6% (vs. 3.9% as per the June meeting), and for 2026 to 3.4% (vs. 3.6% previously),” said Naval Kagalwala, COO & Head of Products at Shriram Wealth Ltd.
Global stock markets reacted positively to the US Fed’s decision, while commodities such as gold and crude oil recorded a sharp decline following the announcement.
Meanwhile, US Dollar saw a volatile trading on Thursday after the US Fed rate cut announcement. “There was a significant dispersion in policy views by this Fed for 2026, which probably means more volatility in financial markets next year. For USDINR, 87.69 continues to remain as immediate support followed by 87.53 while 88.20 acts as first resistance followed by 88.36 levels,” said Kunal Sodhani, Head – Treasury at Shinhan Bank.
How US Fed rate cut impacted the bond market?
When interest rates decline, existing fixed-rate bonds gain appeal since new bonds are issued at lower rates. This heightened demand pushes up the prices of current bonds while driving their yields lower. Such bonds are especially sensitive to rate movements.
According to Anuj Gupta, Director, Ya Wealth Research & Advisory, when the Federal Reserve reduces rates, yields on US Treasury fall and their prices climb—for instance, the 10-year Treasury yield briefly dipped below 4% following the latest Fed cut.
“In general, rate cuts are seen as positive for equities, as reduced borrowing costs can enhance corporate earnings, spur investments, and support overall economic growth,” Gupta said.
Experts also believes that the US Fed rate cut has paved the way for Reserve Bank of India (RBI) in India also to move to cut rates given the slowdown in credit off take and to spur growth in the economy.
“Another reason is slow transmission of rates cuts so far in the banking system. This is due to the steep government bond yield curve as banks tend to borrow in the short term and lend for longer tenors for growth sectors,” said Vishal Goenka, Co-Founder of IndiaBonds.com.
Is it right time to invest in bonds after US Fed rate cut?
According to market experts, Fed rate cuts prompt investors to move funds away from safe assets like U.S. Treasuries and bank deposits toward riskier options such as equities, private equity, venture capital, and emerging markets.
“As a result, India should expect stronger capital inflows—particularly in Q4, when large global asset managers finalize allocations. This comes at a time when the Indian economy is demonstrating resilience, even in the face of headwinds such as the Trump administration’s imposition of a 50% tariff on Indian exports. Overall, India stands to benefit from a “double engine” of global liquidity easing and strong domestic fundamentals,” said Nachiketa Sawrikar, Fund Manager, Artha Bharat Global Multiplier Fund.
Naval Kagalwala of Shriram Wealth Ltd further said that the focus now shifts to the H2 supply distribution and the RBI MPC Oct policy meeting, from bond market prospective.
“We expect the RBI MPC to stay put on rates in the upcoming meeting, though revisions in CPI projections (following GST rate rationalisation) and tweaks to underlying assumptions will be closely watched, given the sharp depreciation in INR and ongoing geopolitical uncertainty,” Kagalwala said.
Meanwhile, Vishal Goenka of IndiaBonds.com said that its a good time to invest in bonds with expectation of further rate cuts this financial year.
“Addressing the steep curve by interest rate cuts and balancing of government securities issuance for short periods maturities could get the desired effect of lowering borrowing costs for companies and economy in general,” Goenka said.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
