U.S. Fed meeting: Will Jerome Powell announce second straight interest rate cut?

The U.S. Federal Reserve’s two-day policy meeting concludes today, with the central bank expected to announce its key benchmark interest rate decision later tonight. The Chairman Jerome Powell-led federal open market committee (FOMC) is widely anticipated to deliver a 25 basis point rate cut, lowering the benchmark lending rate to a range of 3.75%–4.00%.

If confirmed, this would mark the second consecutive rate reduction, as the Fed navigates growing economic uncertainties and labour market pressures stemming from the U.S. government’s recent tariff policies.

The policy outcome will be announced at 2 p.m. EDT in the U.S., corresponding to 11:30 p.m. IST for investors and market participants in India.

In line with Wall Street expectations, the U.S. Federal Reserve last month slashed interest rates by 25 bps to a range of 4%–4.25%, marking its first rate reduction since December 2024. The central bank also indicated the possibility of two additional cuts before the end of the year, citing growing concerns over the U.S. labor market.

The FOMC also reaffirmed its commitment to achieving maximum employment and maintaining inflation at 2% over the long term.

Will the rate cut spark a rally on D-Street?

According to market experts, the rate cut could boost capital flows into India, as lower U.S. rates diminish the dollar’s appeal and encourage investors to seek higher returns elsewhere.

“The upcoming Fed decision remains a key event for global markets; although a 25-bps rate cut is widely anticipated, investors will closely track its commentary for further rate cuts, which will guide the future market trajectory," said Vinod Nair, Head of Research, Geojit Investments.

Echoing the same, Sudeep Shah, Head - Technical Research and Derivatives at SBI Securities, said the market participants will keep a close eye on the U.S. Federal Reserve’s policy outcome later tonight, where the street widely anticipates a 25-basis point rate cut.

Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services also opined that markets will now turn their focus to the U.S. Federal Reserve’s policy outcome later today for cues on the future interest rate trajectory. “Optimism around trade progress, upcoming earnings, and sustained FII inflows is expected to lend support to near-term market sentiment.”

Meanwhile, the Indian benchmark indices closed higher today amid optimism around U.S. Federal Reserve rate cut. The sentiment was further lifted after U.S. President Donald Trump said he “will have a trade deal with India soon” and that he has “great respect for Prime Minister Modi”. Trump’s remarks come at a time when India and the United States are engaged in talks to negotiate a trade deal.

The BSE Sensex ended 369 points higher, or 0.44%, at 84,997, while the NSE Nifty crossed the crucial 26,000 mark, settling at 26,053.90, up 0.45%.

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