US Fed Rate Cut: Jerome Powell Reduces Interest Rates By 25 Bps; 2 More Cuts Likely This Year

US Fed Rate Cut, US Fed Meeting News: In a much-anticipated decision, the US Federal Reserve on September 17 cut interest rates by 25 basis points (bps) to 4.00%-4.25%. The latest rate cut comes nine months after the previous rate reduction in December 2024, and was widely expected by economists and investors.

As per the latest ‘dot plot’, the US central bank’s officials expect two more cuts this year. The US markets surged after the Fed rate cut, with the Dow Jones trading higher by nearly 1% and the Nasdaq recovering almost all intraday losses to trade flat.

The Federal Open Market Committee (FOMC) approved the cut by an 11-1 vote, a stronger show of unity than many on Wall Street expected.

“Recent indicators suggest that growth of economic activity

moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated,” the FOMC said in its statement.

“The Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4-1/4 per cent,” it added.

It also said uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen.

The Fed, led by Chair Jerome Powell, reduced borrowing costs three times last year till December 2024. But it then put any further cuts on hold to evaluate the impact of President Donald Trump’s sweeping tariffs on the economy. The US central bank kept its key interest rates unchanged at 4.25%-4.50% for five times in a row till the previous July 2025 policy review.

US Fed Rate Cut: How Will It Impact Indian Markets?

After the US Fed decision, the Nifty futures (GIFT Nifty) were trading 114 points higher at 25,528, suggesting a gap-up opening on Thursday.

The US Fed rate cut is especially positive for sectors like IT, pharma, and other exports-oriented industries.