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On Wednesday, October 29, 2025, the US Federal Reserve cut its benchmark interest rate by 25 basis points (bps), that is, 0.25%. The new rate is now between 3.75% and 4.00%. This is the second consecutive rate cut this year, marked by the US Fed. This decision aims to keep money flowing, supporting liquidity & the economy as the US job market shows signs of slowing down. The decision, made in a 10–2 vote, also came alongside the announcement that the Fed would restart limited purchases of Treasury securities to preserve liquidity in the money markets.
This quarter-point rate cut reflected the central bank’s cautious shift in monetary policy, especially at a time when the US government is operating under a federal shutdown, limiting the availability of key economic data. According to the reports of the Federal Open Market Committee (FOMC), “available indicators suggest” that the economy continues to grow at a moderate pace however, policymakers are becoming more worried about weak employment data.
Main Highlights from the US Federal Reserve Meeting
Regarding the interest rate cuts, the federal policymakers had different views about the economy. Governor Stephen Miran wants to lower interest rates further to help boost growth. In contrast, Kansas City Fed President Jeffrey Schmid believes there should be no rate cuts because inflation remains a concern. In the US, inflation has increased from about 2.3% in April to 2.7% in August, partly due to new import taxes set by the Trump administration.
Chair Jerome Powell, however, downplayed market hopes of another rate cut in December, saying that the expectations of further easing were “far from a foregone conclusion.” After the announcement, US stock markets reacted modestly. The Dow Jones and S&P 500 closed lower, while the Nasdaq increased due to strength in the tech sector. Bond yields rose as investors changed their expectations for more monetary easing.
Market strategist Alexandra Wilson-Elizondo from Goldman Sachs Asset Management commented that “anchored inflation expectations and a cooling labor market” supported a cautious easing bias, leaving the door open for another small cut in December if economic conditions weaken further.
Must Read: Top 10 GDP Countries 2025: World GDP Rankings 2025
How the Fed’s Rate Cut Impacts Indian Stock Markets?
The Federal Reserve’s move is expected to have ripple effects across global financial markets, including India. Since US interest rates influence dollar flows & global risk sentiment, the latest rate cut could benefit emerging markets. Analysts believe foreign institutional investors (FIIs) may increase their exposure to Indian equities as lower US yields reduce the relative appeal of American bonds.
Market expert Avinash Gorakshakar noted that while the Fed’s decision was priced mainly into Indian markets, it remains “net positive in the longer term.” He added that easing US monetary policy could support risk-on sentiment and foreign fund inflows. However, he cautioned that investors should not expect a runaway rally solely on the back of the Fed’s move.
Mohit Gulati, CIO of ITI Growth Opportunities Fund, described this rate cut as a potential “pivot in global monetary policy.” He said that, "For India, it signals renewed foreign portfolio inflows and a stronger liquidity environment, particularly for financial and consumption-oriented sectors". Gulati reminded investors that “rate cuts do not magically fix growth or earnings. This is a liquidity tailwind, not a fundamentals reset.”
Technical View: Nifty 50 Outlook Post Fed Cut
The stocks of the Indian stock market started on Thursday with some hope. The Nifty 50 index created a small candle on its daily chart, suggesting slight selling pressure near an important resistance area. Technical indicators are still encouraging, as the Relative Strength Index (RSI) increased from 67.92 to 72.43, showing strong buying interest. Sudeep Shah, Head of Technical Research at SBI Securities, noted that the Nifty’s immediate resistance is between 26,100 and 26,150. If it breaks above 26,150, it could lead to further gains towards 26,350.
On the downside, there is essential support between 25,850 and 25,800. As global liquidity gets better, Indian markets can show selective strength. This is especially true for banking, real estate and consumer sectors, which can benefit from foreign investment.
Also Read: Top 10 Richest State in India: GDP, Per Capita Income & Growth
Broader Implications for Investors
The Fed’s rate cut shows it is taking a friendlier approach to the economy. However, experts caution that the central bank is being careful with its decisions. As Ross Maxwell, Global Strategy Lead at VT Markets, observed, “Whilst the Fed is easing, it is doing so with caution.” This careful approach may lead to short-term ups and downs in equities and bond yields for investors.
For Indian investors, the main point is clear: global liquidity conditions are improving, but growth varies. The drop in US bond yields may bring more foreign investment into emerging markets. However, continued growth will rely on India's domestic earnings and overall economic strength.
The 0.25% cut in US Federal Reserve interest rates may not change everything on its own, but it highlights a global trend towards easier monetary policies. For India, this could mean more interest from foreign investors, better cash flow and possibly higher stock prices in the medium term. However, the future will depend on how inflation and job data influence the Fed's future decisions and how well Indian stocks benefit from the global flow of money in the coming months.
At present, India remains one of the cleanest macro stories in the emerging market universe, with stable growth, strong corporate earnings and improving liquidity, setting the stage for continued investor confidence even amid global uncertainty.
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