The US Federal Reserve has announced its third consecutive rate cut, reducing the benchmark interest rate by 25 basis points to a range of 3.5–3.75 percent, marking the lowest level in three years. This decision comes amid rising concerns over the state of the US economy, as policymakers remain divided about the path ahead. The 9:3 vote indicates uncertainty at the central bank as it tries to balance slowing job growth with persistent inflationary pressures.

The move has also triggered political reactions, with US President Donald Trump sharply criticizing Fed Chair Jerome Powell. Calling him “stiff” and a “deadhead,” Trump argued that the rate cut should have been twice as large. His remarks reflect a broader anxiety about the economic slowdown in the US, adding to the volatility already seen in global financial markets.

As India gears up for the next trading session, early cues remain subdued. The GIFT Nifty is trading largely flat, pointing toward a muted opening. Asian markets are mixed, with the Hang Seng index gaining 0.76 percent due to renewed optimism in tech stocks, while the Nikkei and Shanghai indices are witnessing declines. These varied signals suggest that Indian markets may react cautiously as investors assess the global spillover effects of the rate cut.

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A softer US dollar resulting from the rate cut could influence Indian assets in several ways. Precious metals like gold and silver may see upward movement, while the rupee could receive short-term support. At the same time, easier global liquidity often encourages foreign investors to seek opportunities in emerging markets such as India, potentially offering a brief boost to domestic equities already hovering near record highs.

Market analysts, however, warn that the Fed’s decision may indicate deeper issues within the global economy. Harshal Dasani of INVAsset PMS noted that a rate cut at a time of elevated asset prices usually signals pressure on the real economy that markets may not fully recognize. He added that in previous cycles, early rate cuts ahead of downturns often foreshadowed sharper slow growth, rather than initiating a renewed bull market, raising questions about what lies ahead for global and Indian markets alike.

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