US Fed Cuts Interest Rates by 25 Basis Points: Indian Market to React Cautiously

The Jerome Powell-led US Federal Reserve announced a 25-basis point reduction in its benchmark interest rate, lowering the target range to 3.75%–4.00% after concluding its two-day policy meeting on Wednesday, October 29, 2025.

Focus on Future Policy Decisions

In its official statement, the Federal Open Market Committee (FOMC) emphasised that future policy decisions will be guided by the balance of risks in the US economy, along with the evolving economic outlook and incoming data.

“In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by ¼ percentage point to 3¾–4 percent,” the Fed said in its policy statement.

The October rate cut comes at a time of persistently high consumer inflation, with the Consumer Price Index (CPI) rising 3% year-on-year in September 2025, up slightly from 2.9% in August. The move signals the Fed’s cautious approach to supporting growth while keeping inflationary pressures in check.

Impact on Indian Stock Markets

Indian equity benchmarks Sensex and Nifty 50 are expected to open lower on Thursday, mirroring weak global sentiment following the Fed’s policy announcement and Chair Jerome Powell’s comments.

Also Read: Gold Prices Slide ₹12,700 From Peak; What Are the Key Triggers That Could Impact Rates This Week 

Trends from the Gift Nifty also indicate a negative start, with the index trading near 26,163, reflecting a discount of about 75 points compared to the previous close of Nifty futures.

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