Americans got Christmas gift, a hat-trick of interest rate cuts

US News: Just before Christmas, the US Central Bank Federal Reserve has given a big gift to millions of Americans. The Fed Reserve announced a third consecutive cut in interest rates in the last meeting of the year. This cut was 25 basis points, bringing the Fed's policy rate to the range of 4.25-4.50 percent. A total of one percent has been cut in the last four months, which is expected to provide relief to the US economy.

Interest rate cut for the third time

Fed Chairman Jerome Powell announced a rate cut for the third consecutive time, saying that this step is necessary to keep the US economy stable. After a cut of 25 basis points in November and 50 basis points in September, this step is important in reducing the economic pressure of the past months. The next meeting will be held on 28-29 January 2025 after Donald Trump becomes President, due to which there is a possibility of change in monetary policies.

How will the policies be next year?

According to Jerome Powell, the Fed can only cut 50-50 basis points in 2025 and 2026. It is being speculated that interest rates will be kept stable in the January 2025 meeting. Experts believe that the Fed will now take steps cautiously so that a balance can be made between economic stability and inflation.

Effect on stock market

The effect of this decision of the Fed was seen on the US stock market. Dow Jones, NASDAQ Composite, and S&P 500 declined. Shares of major companies like Tesla, Google (Alphabet), Amazon, and Microsoft declined. This has increased the concern of investors, but in the long term this step can be helpful in stabilizing the economy.

Dollar index jump

After the Fed's decision, the dollar index saw a tremendous jump. It reached a high of 107.73, which reflects a gain of 7 percent in the last three months. It is estimated that the dollar index may soon cross the level of 110.

Fall in gold and silver prices

The prices of gold and silver have started falling. Gold futures fell by $ 28.40 an ounce to $ 2,633.60 in the Comex market, while silver futures are trading at $ 30.60 an ounce. Investors are now turning to the dollar and other assets.

Impact on India

Interest rates were kept stable in the December MPC meeting in India. However, a 25 basis point cut is expected in the February 2025 meeting under the leadership of new governor Sanjay Malhotra. The country's inflation rate is expected to remain close to 4 percent. The Indian government, Finance Minister Nirmala Sitharaman and Commerce Minister have already advocated cutting interest rates, which can boost demand in the domestic market.

Conclusion

This decision of the Fed Reserve to cut interest rates is a big step for the US economy. While this will provide relief to consumers and industries, its impact on the stock market and the global economy will be worth watching. This is an opportunity for countries like India to take advantage of global economic changes by changing their financial policies.