By Anurag Kumar

Copyright timesnownews

New Delhi: The US Federal Reserve has cut interest rates for the first time in 2025, lowering its benchmark by 25 basis points to 4–4.25% to offset mounting risks to the labour market. The widely anticipated move is being closely tracked in India, where equity benchmarks are already on a strong run. Gift Nifty futures were trading higher at 8:30 am Thursday, signalling that the Nifty50 will open above Wednesday’s two-month high of 25,330.25. The index has gained in ten of the past eleven sessions and sits just 3.6% below its all-time peak from September 2024. Powell Stresses ‘Risk-Management Cut’ Fed Chair Jerome Powell underscored that the central bank was not embarking on an aggressive easing cycle. He described Wednesday’s move as a “risk-management cut,” noting that the labour market has softened and hiring has slowed due to AI-driven disruptions. “Policy decisions remain challenging,” Powell said, highlighting a split within the Federal Open Market Committee (FOMC). Ten of 19 policymakers anticipate at least two more cuts this year, while others remain more cautious. Implications for Indian Markets Lower US rates typically make emerging markets such as India more attractive to foreign portfolio investors (FPIs), as dollar assets lose some appeal and Treasury yields decline. Ross Maxwell, global strategy lead at VT Markets, told ET that financial markets are likely to take the cut positively in the short term. “Equity markets may see short-term support, though bond yields could remain volatile as investors weigh growth concerns against inflation risks,” he said. Domestic Tailwinds Add to Momentum The Fed’s decision coincides with supportive domestic trends. Recent GST-linked tax cuts have eased inflationary pressures, while optimism over India–US trade talks has buoyed sentiment on Dalal Street. Deepak Agrawal, chief investment officer – debt at Kotak Mahindra AMC, told Reuters that the mix of global and domestic conditions could even shape India’s monetary policy stance. “Fed rate cuts and lower inflation due to GST cuts increase the odds of an RBI rate cut in October 2025,” he said. Risks Remain Despite the supportive backdrop, uncertainty lingers. The Fed itself acknowledged that “uncertainty about the economic outlook remains elevated” and inflation remains “somewhat elevated.” Analysts caution that tariff-related costs could continue to filter into consumer prices, which may limit the Fed’s room to ease further. For now, though, Dalal Street looks set to benefit. With FPI inflows expected to strengthen and domestic investors showing resilience, Indian equities appear poised to extend their rally. The sustainability of the uptrend, however, will depend on whether Powell and his colleagues deliver further cuts — or pause again in the face of sticky inflation. Get Latest News live on Times Now along with Breaking News and Top Headlines from Business, Companies and around the world.