Highlights of FOMC Meeting held on January 29, 2025

 US Fed Pauses Rate Cut Decision 

 The US Federal Reserve recently decided to pause further rate cuts, keeping the benchmark interest rates unchanged at 4.25 – 4.50 percent. This decision follows a two-day Federal Open Market Committee (FOMC) meeting and reflects the Fed’s cautious approach to balancing inflation control and economic growth. By maintaining current rates, the Fed signals that it is closely monitoring economic conditions and will adjust policy if necessary to maintain market stability. The decision was broadly in line with Wall Street expectations. This pause indicates the Fed’s strategy to carefully assess economic data and take measured actions to ensure sustainable growth while managing inflation risks in the economy.

 Implications of US Fed Rate Decision on India

 Foreign Investors Pulling Out – Higher interest rates in the U.S. make American bonds more attractive, leading investors to sell their Indian assets and move funds to the U.S. for better returns.

 Rupee Depreciation Risk – As foreign investors exit, the risk of rupee devaluation increases, creating market volatility and making India less attractive for investments in the short term.

 No Rate Cut in India – With the U.S. Federal Reserve keeping rates unchanged due to uncertainty over Trump’s policies, the RBI is also expected to maintain its current stance and avoid any rate cuts in February 2025, opting for a cautious approach.