US Federal Reserve kept interest rates unchanged for the 8th consecutive time but signaled that a rate cut might be possible in September
The US Federal Reserve decided to keep the benchmark interest rates steady at 5.25 per cent- 5.50 per cent after a two-day meeting of the Federal Open Market Committee (FOMC). This marks the eighth consecutive time that interest rates have remained unchanged.
However, Powell signaled the possibility of lowering borrowing costs as early as the next meeting in September, as inflation continues to near US central bank's 2 per cent target.
"There has been some further progress towards the Committee's 2 per cent objective," FOMC said but also pointed out that rate cuts might find a place in the next meeting (September 17-18), just a few weeks before the elections. US's inflation measure, PCE (Personal Consumption Expenditures index), revealed that consumer prices rose by 2.5 per cent in June compared to the previous year, slightly down from May's annual rate of 2.6 per cent.
What does it mean for the Indian Stock Market?
While the US stock market has been riding high on the AI wave, with tech stocks reaching new heights, concerns persist that this surge might just be driven by hype. US stock market's star stock NVIDIA has surged by nearly more than 142 per cent (year-to-date basis) on NASDAQ.
Meanwhile, the Indian stock market has witnessed its benchmark indices reach record highs multiple times this year. On year-to-date basis, BSE Sensex has risen by nearly 13 per cent, or 9,783 points. Whereas, NSE Nifty has gained nearly 15 per cent, or 3,312 points in the same period.
There is a slight chance that a further delay in US rate cuts could dampen market optimism. However, as Governor Shaktikanta Das mentioned in his last rate meeting that RBI's decisions are independent of those of global central banks, the trajectory of benchmark indices might take a different direction.