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Days after Trump won his way to the White House, becoming the 47th President of the United States, the US Federal Reserve slashed the interest rates by 25 basis points, bringing them within the range of 4.5-4.75%. This is the second time this year that the Fed has lowered the interest rates, after cutting them down by 50 basis points in September 2024. u Fed chair Jerome Powell noted that monetary policy remains tight as inflation remains elevated at 2.4% as of September 2024, slightly above the 2% mark set by the commission. However, the Fed remained optimistic about the current state of the economy. "The Committee seeks to achieve maximum employment and inflation at 2% over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate," the FOMC (Federal Open Market Committee) noted in its press release. The rate cut was along widely anticipated lines, although experts were wary of the Fed's way ahead, given that Donald Trump has been elected as the US President. In the past, he has, on multiple occasions, expressed his desire to yield greater influence on the Fed, apart from publicly criticizing Powell. However, Powell continued to stand his ground, noting that Trump cannot legally sack him. He believed in keeping the Fed independent, at least until his tenure as governor ends in 2028. He highlighted that even if he is explicitly asked by Trump to quit, he won't do so. <h2>Trump's regime to inch up inflation?</h2> Trump's electoral promises, if translated into policies, could spell disaster for the Fed's effort to curtail inflation. Reportedly, Trump has promised to levy aggressive tariffs against US trading partners, particularly China, and even extend his 2017 tax cuts. This could mean higher levels of the federal deficit, which would push up prices, wages, and hence, inflation, even as the Fed tries to consistently bring it under control. Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities, notes that it wasn't a surprise when the US Fed cut interest rates by 25 basis points (bps) to 4.75%. The Fed had given enough clues, and the market too had anticipated these rate cuts. "However, what was surprising was how the <keyword id="23863852" type="General" weightage="20" keywordseo="US-10-year-bond-yields" source="keywords">US 10-year bond yields</keyword> moved over the last one and a half months, which have been rising relentlessly from 3.6% to almost 4.5% despite the 50 bps cut in the last Fed meeting. It seems that the market is anticipating slower rate cuts going ahead, and maybe there are even chances of inflation rising. The bond yields have cooled off and slipped below the 4.335% mark. This should be bullish for emerging markets like India," he added.

US Fed cuts interest rates by 25 bps, Powell notes Trump's victory to have no impact on policy decisions

<ul class="summary-list"><li>The Federal Reserve cut interest rates by 25 basis points on Thursday.</li><li>It follows a 50-basis-point cut in September, with the pace of inflation continuing to cool.</li></ul>Another <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-federal-reserve-election-jerome-powell-inflation-jobs-2024-11">interest rate cut</a> is headed Americans' way.On Thursday, the Federal Open Market Committee announced a 25-basis-point interest rate cut, following a <a target="_blank" class="" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">50-basis-point cut</a> in September. It follows continued data showing inflation is nearing the Federal Reserve's 2% target — the consumer price index, a commonly-watched measure of inflation, <a target="_blank" class="" href="https://www.businessinsider.com/inflation-september-cpi-consumer-price-index-federal-reserve-interest-rates-2024-10">rose 2.4%</a> over the year in September.This latest interest rate decision also came two days after Donald Trump <a target="_blank" class="" href="https://www.businessinsider.com/donald-trump-election-victory-impact-investments-costs-housing-taxes-childcare-2024-11">won the presidential election</a>. Trump is expected to implement high tariffs once his term begins, and members of the FOMC will likely begin discussing the impact of the president-elect's policies on the economy and forthcoming interest rate decisions."A victory for Trump could raise doubts over a December cut, and the Fed may strike a more hawkish note as a result," Matthew Ryan, head of market strategy at financial services firm Ebury, said in a statement last week.Trump's victory also throws into question the future of the Fed itself. Trump has previously said that he would like to <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cut-trump-fed-powell-reaction-independence-history-2024-9">have a say in interest-rate decisions</a>, challenging the politically independent nature of the central bank.Fed chair Jerome Powell will likely offer more insight into the Fed's thinking following Trump's victory. He has expressed confidence in the economy's direction in recent months, saying during remarks in late September that "overall, the economy is in solid shape.""We intend to use our tools to keep it there," he said.However, <a target="_blank" class="" href="https://www.businessinsider.com/october-jobs-report-unemployment-rate-nonfarm-payroll-growth-federal-reserve-2024-11">recent jobs data</a> will make it difficult for the central bank to give a clear vision of its upcoming decisions. The economy added just 12,000 jobs in October, well below the 106,000 forecast, primarily because Hurricanes Milton and Helene — along with the Boeing strike — put people temporarily out of work, artificially driving down the employment figures.It will take time for Americans to feel the impact of interest rate cuts, given the lag in monetary policy, meaning credit cards, housing, and car loans won't see immediate relief.The 25-basis-point cut was in line with market predictions. Still, some Democratic lawmakers urged the Fed to implement another 50-basis-point cut to give Americans continued financial relief. On November 1, Sens. Elizabeth Warren and John Hickenlooper wrote in a <a target="_blank" class="" href="https://www.warren.senate.gov/imo/media/doc/final_-_warren_hickenlooper_letter_to_fed_renovember2024ratecut.pdf">letter</a> to Powell that housing costs "are still too high," and bigger rate cuts are warranted."If the Fed moves forward with more rate cuts, housing prices and mortgage rates would thus also likely drop, allowing more families to achieve the American dream," they wrote.

The Federal Reserve gives Americans another interest rate cut

Dear readers, As we approach yet another weekend, here are some key developments across various sectors. Nvidia has surpassed Apple to become the world’s largest company, driven by the AI boom. Meanwhile, the US Federal Reserve cut interest rates, by 25 basis points to 4.75%, the second such reduction in 2024. In the workplace, Gen Z’s approach to mental health got attention, with one employee taking a week off after a breakup. Additionally, Indian banks are expecting steady growth, despite challenges in unsecured lending. Read on for all the details! <h2>Top stories from the week </h2> Indian banks to have steady growth in earnings over next 3-4 years, fees from unsecured lending may dip, notes Jefferies report Jefferies forecasts steady earnings growth for Indian banks over the next 3–4 years, with a 13% annual loan growth rate. However, a decline in unsecured lending could reduce fee income. While net interest income is expected to grow at 12%, challenges such as rising defaults and a potential dip in rate cuts could affect profitability. Despite this, banks’ return on equity and assets remain promising. <a href="https://www.businessinsider.in/finance/news/indian-banks-to-have-steady-growth-in-earning-over-next-3-4-years-fees-from-unsecured-lending-may-dip-notes-jefferies-report/articleshow/115048179.cms" data-type="tilCustomLink" target="_blank">Read more</a> Nvidia becomes world’s largest company amid AI boom, surpasses Apple in the race Nvidia has surpassed Apple to become the world’s largest company by market capitalization, driven by the AI boom. The company’s strong performance is fueled by surging demand for its chips used in AI technologies. With a market cap hitting $3.43 trillion, Nvidia continues to dominate the AI hardware sector, powering data centres and AI research. The company’s revenue growth of 122% YoY further cements its leadership in the AI space. <a href="https://www.businessinsider.in/business/news/nvidia-becomes-worlds-largest-company-amid-ai-boom-surpasses-apple-in-the-race/articleshow/115003223.cms" data-type="tilCustomLink" target="_blank">Read more</a> ‘He had a breakup and took a one-week leave’: Manager shares about his Gen-Z employee, internet reacts A manager’s tweet about granting a Gen Z employee a week off for a breakup sparked widespread debate. While the manager expressed frustration over project delays, internet users defended the employee’s mental health needs, criticizing the manager’s lack of empathy. Some supported the manager’s view, pointing out generational differences in work culture. The incident went viral, furthering discussions about Gen Z’s unique workplace expectations. <a href="https://www.businessinsider.in/careers/news/he-had-a-breakup-and-took-a-one-week-leave-manager-shares-about-his-gen-z-employee-internet-reacts/articleshow/115041747.cms" data-type="tilCustomLink" target="_blank">Read more</a> US Fed cuts interest rates by 25 bps, Powell notes Trump’s victory to have no impact on policy decisions The US Federal Reserve has cut interest rates by 25 basis points to 4.75%, the second such reduction in 2024. Fed Chairman Jerome Powell emphasized the Fed’s independence despite Trump’s criticism and suggested that the economic outlook remains uncertain, though the Fed is focused on inflation targets. Trump’s policies may lead to higher inflation, adding complexity to the Fed’s efforts to stabilize prices. Experts anticipate that bond yields will stabilize, benefiting emerging markets like India. <a href="https://www.businessinsider.in/finance/news/us-fed-cuts-interest-rates-by-25-bps-powell-notes-trumps-victory-to-have-no-impact-on-policy-decisions/articleshow/115070690.cms" data-type="tilCustomLink" target="_blank">Read more</a> Big Tech’s winners and losers from Donald Trump’s win, according to the market After Donald Trump’s election victory, tech stocks surged, with companies like Tesla seeing significant gains. Tesla’s rise was fueled by Trump’s public support for CEO Elon Musk. Conversely, companies like Apple faced challenges due to fears over potential tariffs on China. While some, like Google, might benefit from lighter regulations, others like Meta could face political challenges. Overall, the election results reshaped market expectations for Big Tech’s future. <a href="https://www.businessinsider.in/tech/news/here-are-big-techs-winners-and-losers-from-donald-trumps-win-according-to-the-market/articleshow/115067798.cms" data-type="tilCustomLink" target="_blank">Read more</a> <h2>Top web stories</h2> <a href="https://www.businessinsider.in/entertainment/webstories/donald-trump-on-screen-a-look-at-his-iconic-cameos/slidelist/115045250.cms" data-type="tilCustomLink" target="_blank">Donald Trump on screen: A look at his iconic cameos</a> <a href="https://www.businessinsider.in/india/webstories/8-lifestyle-mistakes-contributing-to-health-problems-in-india/slidelist/115051791.cms" data-type="tilCustomLink" target="_blank">8 lifestyle mistakes contributing to health problems in India</a> <a href="https://www.businessinsider.in/travel/india/webstories/10-magical-indian-experiences-every-traveller-should-try/slidelist/115052527.cms" data-type="tilCustomLink" target="_blank">10 magical Indian experiences every traveller should try</a>

Weekend wrap: Nvidia’s AI-driven surge, Indian banks’ steady growth and more

Global markets are looking ahead to the US Fed's meeting scheduled for Thursday, November 7, 2024, expecting the Jerome Powell-chaired FOMC (Federal Open Market Committee) to slash interest rates further by 0.25%. In September this year, the Fed surprised the markets by cutting interest rates by a massive 0.5%, for the first time in 4 years. As per the <keyword id="23807624" type="General" weightage="20" keywordseo="CME-Fed-Watch-Tool" source="keywords">CME Fed Watch Tool</keyword>, there is now a 99.5% chance that the Fed will reduce the interest rates by around 25 basis points, bringing it within the range of 4.5% to 4.75%. Only 0.5% believe that the Fed might leave the rates unchanged, within their present range of 4.75% to 5%. As for the Fed's December meeting, scheduled for December 18, per the CME Fed Watch tool, 79.5% believe that interest rates would be in the range of 4.25% to 4.5%. Another 20.4% believe that yields will remain in the range of 4.5% and 4.75%. Only 0.1% see the interest rates staying within their current range of 4.75% to 5% <h2>No major changes anticipated</h2>However, it is unlikely that this quarter-point rate cut would bring about any significant financial changes in the US economy. The Fed is again expected to bring down the interest rates by another 25 basis points in their December meeting. This would imply a total rate cut of about 50 basis points by the end of this year. So, why is the Fed not bringing down interest rates by 50 basis points in one fell swoop this time around? Why wait till December to bring down the rates by another 25 basis points? Experts believe that it could stoke inflation, which has seen a sharp decline in the recent past. A steep slash of borrowing rates could accelerate borrowing activity and inject significant cash into the economy at once, pushing up inflation. Per the Fed's recent projections, a total of 4 rate cuts are anticipated in 2025. On a YoY basis, inflation in the US dipped to 2.4%, close to the Fed's target of 2%. With inflationary pressures reined in, the economy growing at the rate of 2.8% during the third quarter of FY24, and the unemployment rate down to 4.1%, the markets see much merit in bringing interest rates down. This is especially important to boost spending, particularly in sectors such as housing and automobiles, where even a slight tinkering in interest rates can drastically impact the amount and volume of loans taken to own them. Data suggests that during Trump's presidency tenure, i.e., between 2017 and 2021, inflation averaged at a rate of 1.9% a year. During the Biden administration, where Kamala Harris served as VP, the inflation is on track to average around 5% a year. Shrisha Acharya, Vice President, Anand Rathi Global Finance, also notes that the results of the impending US elections, which are likely to be declared tomorrow, will impact the yields and stock markets. "The Trump card, coupled with potential Republican control, could mean higher bond yields due to anticipated increases in deficit spending, inflation risks, and potential tax cuts. This could very well jiggle the confidence in U.S. Treasury bonds and thus start a chain effect that will possibly impact global market stability and lead to short-term volatility. On the other hand, Harris’ rise has been met with a stock market rally glued on expectations of economic stability and controlled inflation, with more predictable fiscal policy likely to help in a soft landing," he explains.

What can you expect from the US Fed meeting later this week? Here's all you need to know

Around the world, all eyes will be on the US <keyword id="19904332" type="General" weightage="100" keywordseo="Federal-Reserve" source="keywords">Federal Reserve</keyword> meeting, which starts today, and will announce changes in <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword>, if any, after concluding its two-day meet tomorrow i.e. on 18th September. Most experts are anticipating a 25 basis point <keyword id="19920203" type="General" weightage="20" keywordseo="rate-cut" source="keywords">rate cut</keyword>, while some suggest a sharper, 50 basis point rate cut might also be possible. According to the <keyword id="19950992" type="General" weightage="20" keywordseo="CME-FedWatch" source="keywords" meta.keywordsubtype="org" meta.entityname="CME FedWatch" meta.hostid="261" meta.entityid="CME FedWatch">CME FedWatch</keyword> tool, there is an 85% probability of a 25 basis point rate cut in September. However, the firmer-than-expected core inflation reading will perhaps make it more difficult for Fed chairman <keyword id="20058769" type="General" weightage="20" keywordseo="Jerome-Powell" source="keywords">Jerome Powell</keyword> to justify a 50 basis point cut in September. However, as Gaurav Garg from Lemonn, a trading and investing platform explains, “a bold 50-basis-points (bps) rate cut could ignite optimism leading to weaker dollar and further inflows into emerging markets like India, while a cautious 25 bps move may trigger disappointment, with markets currently pricing increasing odds for a bigger cut”. Historically, a rate cut fuels optimism in the domestic markets, as it reduces corporate borrowing costs and increases consumer spending power. Lower interest rates also implies cheaper borrowing, which is advantageous for homeowners looking for lower mortgage rates. “The reduction in borrowing costs may promote demand in the home market as well as encourage refinancing activity”, says Swapnil Aggarwal, Director, VSRK Capital “However, the market’s reaction will depend on the motivations behind the Fed’s decision. If the rate cut is in response to concerns about a slowing economy or rising unemployment, the positive market effect could be muted. But if the Fed is cutting rates due to low inflation and a stable growth outlook, markets may rally in response to the more favorable borrowing environment”, Agarwal continued. After this, the Fed would convene between November 5-7. Two key employment reports, which are due before the Fed announces its November outcome, are likely to impact this. However, as experts see it, there is a slight leaning towards a 50 basis point rate cut in November, with the probability currently at 52.4%, as per CME FedWatch For December, the likelihood of another 50 basis point rate cut increases significantly, with the probability standing at 80.4%. “Given the higher probability, if November sees only a 25 basis point cut, it is likely that a 50 basis point cut will follow in December”, says Alex Volkov, a market analyst at VT Markets.

Fed meeting starts today, rate cut on the cards. Here’s what experts are saying

On Wednesday, the US <keyword id="19904332" type="General" weightage="100" keywordseo="Federal-Reserve" source="keywords">Federal Reserve</keyword> slashed the <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> by a mammoth 50-basis points. In response, markets across the world, including the Nifty and Sensex, scaled record highs. While Nifty was up by around 280 points, breaching the 25,000 mark, Sensex was up by almost 1,000 points. Globally, S&amp;P was up by 1.70%, while Hang Seng inched up by 1.06% But did you know that along with the Fed, many other <keyword id="19946830" type="General" weightage="20" keywordseo="central-banks" source="keywords">central banks</keyword> across the world also made changes to their interest rates this week? This includes <keyword id="19935367" type="General" weightage="20" keywordseo="Brazil" source="keywords">Brazil</keyword>, Indonesia, Japan, <keyword id="19953502" type="General" weightage="20" keywordseo="Turkey" source="keywords">Turkey</keyword> and England. We take a closer look: <h2>Brazil</h2> Latin America's largest economy, which has set a 3% inflation target for itself, is currently witnessing 4.25% inflation. The apex bank unanimously decided to raise its Selic rate, or benchmark interest by 25 basis points for the first time in 2 years, taking it to 10.75%. The decision making committee, also known as the Copom, also signalled towards three more rate hikes of 25 bps each by the end of this year, closing the year with the Selic at 11.25%. Bolstered by a solid labour market, with unemployment in the country dipping to 6.9% in May, the lowest since 2014, Brazil is also witnessing a surge in employment growth, which grew 2.9% on a YoY basis, and a rise in average monthly earnings, which jumped up 5.6% from the year ago period. Such strong labour markets, combined with higher consumer spending, stokes fears of inflation. This is why such tightening measures i.e. raising the borrowing costs become necessary. <h2>Japan</h2> The country held steady it's short term interest rate at 0.25%, treading largely along expected lines. You'd think the only way up for Japanese interest rates from hereon is up, but the country has, for decades, also held a negative interest rate, something it did away with only in March this year. This was done to fire up consumption and increase borrowing, which seems to be yielding fruits now. Governor Kazuo Ueda also hinted at raising interest rates, if spending and consumption stay in line with the central bank’s target of 2% inflation. <h2> Indonesia</h2> The country announced a quarter basis point (25 bps) rate cut for the first time in 3 years, a surprise move given that most experts anticipated the country to hold steady on to its interest rate of 6.25%. Bringing down the interest rate to 6%, governor Perry Warjiyo expects this to boost the Rupiah, the country's currency and also accelerate foreign inflows into the economy. Given that the country's inflation projections for 2024 and 2025 remain within the targeted 2.5%, experts anticipate more rate cuts in the remaining part of the year. <h2> Turkey</h2> The country's central bank kept the interest rate steady at 50% for the 6th consecutive month in September. Turkey had last hiked it's interest rate by a massive 500 basis point in March this year, in a bid to tame inflationary pressures, which are now down from 75% in May to 52% last month. The central bank estimates that inflation will be down to 42% by end of 2024, dipping further lower to 17.5% by 2025 end. Analysts expect the country to make its first rate cut in November this year, as inflation in the country stabilises to some extent. <h2> England</h2> The good old British refrained from tinkering with their interest rates, leaving it unchanged at 5%, even as their American counterparts slashing interest rates and keeping the interest rate target range between 4.75% and 5%. This comes amidst the rapid rising pace of service prices, which make up for 80% of the British economy, and wage rise. The decision was largely expected, given that inflation, which holds steady at 2.2% as of August, remains above the apex bank’s target. Sevice inflation in the country jumped to 5.6% in August, which is keeping Bank of England on alert. Although, it is expected to revise rates in its next meeting in November.

Not just Fed, but central banks of these countries also tinkered with rate cuts this week

The rupee fell 7 paise to trade at 84.47 against the US dollar in early trade on Thursday weighed down by a muted trend in domestic equities and strength of the American currency in the overseas markets. <keyword id="20024982" type="General" weightage="20" keywordseo="Forex-traders" source="keywords">Forex traders</keyword> said the latest <keyword id="20064878" type="General" weightage="20" keywordseo="Federal-Open-Market-Committee" source="keywords">Federal Open Market Committee</keyword> (FOMC) minutes reveal a significant shift in the Federal Reserve's outlook. The Fed is likely to put downward pressure on short-term interest rates, reducing the appeal of dollar-denominated assets and contributing to the decline in the Dollar Index. At the interbank foreign exchange, the rupee opened at 84.45 and moved in a tight range and touched 84.47 against the greenback, registering a fall of 7 paise over its previous close. On Wednesday, the rupee depreciated by 11 paise to close at 84.40 against the US dollar. "The 84.50 level remains a strong support for the USD/INR pair. <keyword id="23456490" type="General" weightage="20" keywordseo="RBI-interventions" source="keywords">RBI interventions</keyword>, coupled with anticipated capital inflows -- such as Godrej Properties' Rs 4,000 crore QIP and Univest's USD 16 million capital raise -- are expected to support the rupee further," CR Forex Advisors MD Amit Pabari said. Pabari further added that the USD/INR pair is likely to encounter resistance near the 84.50 mark, with expectations of trading within the 83.80 to 84.50 range, showing a slight downward bias. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.14 per cent at 106.22. Brent crude, the global oil benchmark, fell 0.18 per cent to USD 72.70 per barrel in futures trade. In the domestic equity market, the 30-share BSE Sensex rose 68.21 points or 0.09 per cent to 80,302.29 in morning trade, while Nifty was up 34.20 points or 0.14 per cent to 24,309.10 points. Foreign Institutional Investors (FIIs) infused Rs 7.78 crore in the capital markets on a net basis on Wednesday, according to exchange data. SEE ALSO:<a href="https://www.businessinsider.in/business/auto/news/honda-activa-e-and-qc1-electric-scooters-unveiled-in-india-to-go-on-sale-in-2025/articleshow/115725242.cms" target="_self"></a> <a href="https://www.businessinsider.in/business/auto/news/honda-activa-e-and-qc1-electric-scooters-unveiled-in-india-to-go-on-sale-in-2025/articleshow/115725242.cms" target="_self">Honda Activa e and QC1 electric scooters unveiled in India, to go on sale in 2025</a><a href="https://www.businessinsider.in/tech/news/indias-pc-market-reaches-new-high-with-4-49-million-shipments-in-q3-2024/articleshow/115719599.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/news/indias-pc-market-reaches-new-high-with-4-49-million-shipments-in-q3-2024/articleshow/115719599.cms" target="_blank">India’s PC market reaches new high with 4.49 million shipments in Q3 2024</a><a href="https://www.businessinsider.in/tech/mobile/news/realme-gt-7-pro-with-snapdragon-8-elite-chipset-launched-starting-at-59999/articleshow/115689685.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/news/realme-gt-7-pro-with-snapdragon-8-elite-chipset-launched-starting-at-59999/articleshow/115689685.cms" target="_blank">Realme GT 7 Pro with Snapdragon 8 Elite chipset launched starting at ₹59,999</a>

Rupee falls 7 paise to 84.47 against US dollar in early trade

<ul><li>The <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword>’s <keyword id="20104157" type="General" weightage="20" keywordseo="monetary-policy" source="keywords">monetary policy</keyword> meeting is set to begin today.</li><li>The central bank will announce the outcome of the <keyword id="22684891" type="General" weightage="20" keywordseo="MPC-meeting" source="keywords">MPC meeting</keyword> on October 9.</li><li><keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> has kept the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> unchanged for the last nine consecutive meetings.</li></ul>The Reserve Bank of India (RBI) is set to begin its three-day monetary policy meeting on Monday and will run from October 7 to October 9. All eyes are on the outcome, as the central bank has kept the repo rate unchanged for the last nine consecutive meetings. The repo rate, currently at 6.50%, has remained steady since the RBI adopted a cautious stance to balance inflation control and economic growth. The Monetary Policy Committee (MPC), headed by RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="keywords">Shaktikanta Das</keyword>, is expected to weigh key factors like inflationary trends, global economic uncertainties, and domestic growth prospects. Inflation continues to be a challenge, particularly in food and fuel prices, which saw a surge earlier this year. As per the data from the Ministry of Statistics &amp; Programme Implementation, though the All India Consumer Price inflation in August was 3.65%, which is under the RBI target band the food inflation stands at 5.65% and it remains above the RBI's medium-term target of 4%. Despite these inflationary pressures, the RBI has opted for a status quo on the repo rate, primarily to support economic recovery post-pandemic. However, there are rising concerns that external factors, like the rising global crude oil prices and tensions in West Asia, may compel the RBI to reconsider its current stance. Earlier this month the central government appointed three new members to the monetary policy committee. The MPC comprises three members from the RBI and three external members appointed by the Central Government. The newly reconstituted committee consists of the Governor of the Reserve Bank of India as the Chairperson, ex officio; the Deputy Governor of the Reserve Bank of India, in charge of monetary policy--Member, ex officio, and one officer of the Reserve Bank of India, nominated by the Central Board -- Member, ex officio. The new external members included in the MPC are Professor Ram Singh, Director, Delhi School of Economics, University of Delhi, Saugata Bhattacharya, economist; and Dr. Nagesh Kumar, Director and Chief Executive, Institute for Studies in Industrial Development. Market participants and analysts are closely monitoring this meeting for any forward guidance on future rate actions. Many believe the central bank will continue its wait-and-watch approach, but a surprise rate hike cannot be entirely ruled out. On September 18, the <keyword id="19901377" type="General" weightage="20" keywordseo="US-Federal-Reserve" source="keywords">US Federal Reserve</keyword> announced a steep 50 basis points interest cut in its review meeting. US Fed announced the rate cuts after holding interest rates steady for eight straight meetings. The outcome of the MPC meeting will be announced on October 9 and will set the tone for future monetary policies amid the changing global economic landscape. The Reserve Bank of India (RBI) will commence its three-day monetary policy meeting on Monday, October 7th, and continue until October 9th. The result of this meeting is eagerly anticipated, as the central bank has maintained a steady repo rate for the past nine consecutive meetings. The repo rate has remained at 6.50% since the RBI adopted a cautious approach to balance inflation control and economic growth. The Monetary Policy Committee (MPC), led by RBI Governor Shaktikanta Das, will consider various factors, including inflationary trends, global economic uncertainties, and domestic growth prospects. Inflation remains a challenge, particularly in food and fuel prices, which surged earlier this year. According to data from the Ministry of Statistics &amp; Programme Implementation, All India Consumer Price inflation in August was 3.65%, within the RBI's target band, however, food inflation stands at 5.65%, exceeding the RBI's medium-term target of 4%. Despite inflationary pressures, the RBI has opted to maintain the repo rate to support economic recovery post-pandemic. Nonetheless, rising concerns about external factors, such as increasing global crude oil prices due to tensions in West Asia, may prompt the RBI to reassess its current stance. Earlier this month, the central government appointed three new members to the monetary policy committee. The MPC consists of three members from the RBI and three external members appointed by the Central Government. It is worth noting that on September 18, the US Federal Reserve announced a substantial 50 basis points interest rate cut in its review meeting, reversing its previous stance of holding rates steady for eight consecutive meetings. With inputs from ANI. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/september-auto-sales-automakers-report-a-decline-mahindra-and-mahindra-overtakes-tata-motors/articleshow/113925972.cms">September Auto sales – Automakers report a decline, Mahindra and Mahindra overtakes Tata Motors</a> <a href="https://www.businessinsider.in/business/auto/news/ola-electric-continues-to-lose-market-share-as-bajaj-auto-and-tvs-motor-gain/articleshow/113900252.cms">Ola Electric continues to lose market share as Bajaj Auto and TVS Motor gain</a> <a href="https://www.businessinsider.in/business/telecom/news/airtel-is-using-ai-powered-technology-to-block-spam-calls-and-messages/articleshow/113691942.cms">Airtel is using AI-powered technology to block spam calls and messages</a>

RBI's monetary policy committee meeting begins today, announcement on October 9

Post the Fed's 50 basis point interest rate cut in September, the yellow metal has been scaling record highs every day. And per a recent <keyword id="22362020" type="General" weightage="20" keywordseo="UBS-report" source="keywords">UBS report</keyword>, its glitter is not going down anytime soon, with gold potentially touching $2,750 by the end of this year, and as much as $2,900 by the third quarter of 2025. Treasury yields, or interest rates have always had an inverse relationship with gold, which is why the metal's demand witnesses a notable uptick, every time the Fed slashes rates. This is because an interest rate cut reduces the yields i.e. returns that investors earn by way of having funds in government treasury bonds. As a result, investors tend to withdraw their money, weakening the dollar, thereby making the yellow metal a lucrative investment option. Going ahead, the markets are anticipating that the Fed will further bring down interest rates again, by around 75-100 basis points by the end of this year. As the CME FedWatch Tool indicates, there is now a 62.2% chance that the Fed will cut down interest rates by another 50 basis point during its meeting in November. This is also why <keyword id="19910265" type="General" weightage="20" keywordseo="gold-prices" source="keywords">gold prices</keyword> have been seeing a healthy growth in both domestic and international markets. According to a report by Angel One, the demand of safe-haven gold is only set to go up in the months to come. Apart from Fed's rate cuts and the upcoming <keyword id="20585365" type="General" weightage="20" keywordseo="US-elections" source="keywords">US elections</keyword>, there are tensions brewing globally on the geo-political front, with militant group Hezbollah's leader <keyword id="22445260" type="General" weightage="20" keywordseo="sayyed-hassan-nasrallah" source="keywords">Sayyed Hassan Nasrallah</keyword> killed in a powerful airstrike in Beirut. This has dealt a heavy blow to the Iran-backed group, as it reels from an escalating campaign of Israeli attacks. "In such times, zero-yield bullion tends to be a preferred investment, more likely so in a low-interest rate environment and also, during geopolitical turmoil", the note added. <h2>Momentum set to continue </h2>The bullion recently touched an all-time high price of $2,670 on September 24th, 2024, and has rallied as much as 10% during the past 6 months. Closer home, we are approaching the festive season, as India gears up to celebrate festivals like Diwali (Dhanteras) and Akshaya Tritiya in October. These have long been associated with heightened gold purchases in the country. Particularly, Dhanteras sees a surge in gold buying as it is considered an auspicious time to acquire new assets, majorly gold. As the UBS report states, "the metal's current elevated starting point provides increased scope for gains in the coming months, particularly as ETF demand accelerates. We recommend gold as a strategic hedge within a diversified portfolio, suggesting a 5% allocation to the precious metal". Alekh Yadav, Head of Investment Products at Sanctum Wealth, also advises making some allocation to gold in your portfolio, since gold has a negative correlation with equities; whenever equity markets correct, gold typically performs better. Given that US markets are currently at elevated valuations, gold can serve as a hedge against potential global equity corrections, he explains. "In conclusion, we believe that some allocation to gold, even at current levels, makes sense as a hedge against global risks", he continues. As a thumb rule, you should always have anywhere between 5-10% allocation to gold via digital gold, gold bonds, exchange traded funds (ETFs), sovereign gold bonds (SGBs) etc., since it serves as an effective hedge against inflation, and declining yields. Note that your allocation to gold should not be arbitrary or as a lumpsum, but rather in sync with your overall financial goals, and also, should be increased gradually, via SIPs. However, during prevailing economic conditions, increasing your investments in gold might not be a bad idea as well. But remember to consult with your financial planner over this. Over-investing in gold is also not advisable, since the asset class does not generate high-returns, which means a significant potion of your money could be stuck in a non-yield generating asset, when it could have been in equities or other assets, which generate comparatively more returns.

Is this a good time to invest in gold? Here's what experts are saying

For the first time since 202o, the US <keyword id="19904332" type="General" weightage="100" keywordseo="Federal-Reserve" source="keywords" meta.keywordsubtype="org" meta.entityname="Federal Reserve" meta.hostid="261" meta.entityid="Federal Reserve">Federal Reserve</keyword> cut down the benchmark <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> by 50 basis points , bringing the target rate range to 4.75%-5%, from its previous scope of 5.25% to 5.5%. The decision, which was taken 11:1, was not unanimous, a striking departure from all other unanimous interest rate decisions taken by Fed over the last 2 years. Per chairman <keyword id="20058769" type="General" weightage="20" keywordseo="jerome-powell" source="keywords">Jerome Powell</keyword>, the decision was taken in light of easing inflationary pressures in the US economy, which came down to 2.53% this month, as opposed to 2.89% a month prior, and 3.67% last year. "In light of the progress on inflation and the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective", the FOMC committee highlighted in its statement. Signaling more aggressive rate cuts going ahead, Fed projections implied an additional 50 bps rate cut from current levels within 2024, with rate trims going as high as 100 bps in 2025, and another 50 bps in 2026. Notably, last month, Powell had strongly hinted towards a rate cut, saying it was "time for policy to be adjusted". Over the last few years, high interest rates had made home equity loans and credit card interest rates super expensive. In March 2022, which was the first time Fed hiked interest, rates on home equity loans stood at 5.96%%. This has jumped to 8.49% in September 2o24. At 20.78%, credit card interest rates have also been sky-high, swelling by over 400 basis points since March 2022. Indian markets stay flat On Wednesday, Indian equity markets maintained a cautious outlook, with <keyword id="19950208" type="General" weightage="20" keywordseo="BSE-Sensex" source="keywords">BSE Sensex</keyword> and Nifty50 dipping by 0.16% each to close the day in red. During the day, both Sensex and Nifty scaled record highs of 83,326.38 points, and 25.377.55 points respectively. Most market experts anticipated a 25-bps rate cut, but with Fed delivering a mammoth-size cut, the focus is now set to shift from inflation to unemployment, with the rate cut offering much-needed, immediate relief to US economy, which has, for long, been battling high borrowing costs. Per Fed officials, unemployment is set to rise to 4.4% this year, up from its present rate of 4.2%, as recorded in August. Per Bloomberg reports, shortly after the announcement, gold prices also jumped to record highs. The prices of yellow metal were already hovering near all-time highs ahead of the announcement. A rate cut pushes to weaken the greenback, which is what gold is priced in internationally. This makes bullion cheaper, pushing up its demand globally.

Fed trims interest rates by 50 basis points, gold prices touch record-high

<ul class="summary-list"><li><keyword id="19979912" type="General" weightage="100" keywordseo="mortgage-rates" source="keywords">Mortgage rates</keyword> are falling but remain high compared to the rates of the past few years.</li><li>Assumable mortgages can help <keyword id="19907145" type="General" weightage="20" keywordseo="homebuyers" source="keywords">homebuyers</keyword> get lower rates and reduce their monthly payments.</li></ul>Over the past few years, <a target="_blank" href="https://www.businessinsider.com/personal-finance/mortgages/average-mortgage-interest-rate">US mortgage rates</a> have fluctuated wildly, leaving both homebuyers and sellers scrambling. In 2021, rates fell to as low as 2.1% as the <a target="_blank" href="https://www.businessinsider.com/how-fed-rate-cut-could-impact-mortgage-rates-homebuyers-2024-9">Federal Reserve</a> acted to keep the economy ticking during the COVID-19 pandemic. But then inflation spiked. To cool inflation, the Fed implemented a series of rate hikes, pushing mortgage rates to a peak of 7.79% in October 2023, according to data tracked by the <keyword id="19904332" type="General" weightage="20" keywordseo="Federal-Reserve" source="keywords" meta.keywordsubtype="org" meta.entityname="Federal Reserve" meta.hostid="261" meta.entityid="Federal Reserve">Federal Reserve</keyword> Bank of St. Louis. But over the last few years, some homebuyers have used a workaround to get lower rates anyway: a lesser-known loan option called an <keyword id="23243178" type="General" weightage="20" keywordseo="assumable-mortgage" source="keywords">assumable mortgage</keyword>. Assumable mortgages let qualifying buyers take over a seller's existing loan, including its interest rate, principal balance, and other terms. This can lead to significantly lower <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword>, making monthly mortgage payments more affordable and saving thousands over the life of the loan. It's important to note that not all loans are eligible for assumption, but ones backed by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) are. 2024, however, has brought some relief from high rates. In January, <a target="_blank" href="https://www.businessinsider.com/fed-cut-lower-mortgage-rates-should-you-refinance-2024-9">rates</a> hit about 6.7% and have been slowly decreasing since. According to Freddie Mac, the 30-year fixed-rate mortgage dropped to 6.2% as of mid-September, its lowest level since February 2023. The Federal Open Market Committee, which oversees US monetary policy, is expected to <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-decision-this-week-federal-reserve-powell-inflation-2024-9">cut interest rates</a> at its <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/banking/when-is-the-next-fed-meeting">meeting</a> this week. This could lead to further declines in mortgage rates in the coming months. Still, the 2%-ish rates of 2021 aren't likely to return as the Fed remains wary of inflation. So while additional rate declines may ease monthly mortgage payments for some, they won't necessarily make homebuying significantly more affordable for most Americans. For that reason, assumable mortgages still might be the best option for some people to get the lowest rates. Here are the stories of three homebuying couples who secured mortgage rates below 3% since March 2023 using assumable mortgages. They described how they redirected the funds they would have spent on higher monthly mortgage payments into healthcare, renovations, or retirement. <h2>One couple got a 2.6% rate and became the youngest homeowners in their families</h2>In 2022, <a target="_blank" href="https://www.businessinsider.com/first-time-buyers-got-lowest-best-interest-rate-assumable-mortgage-2024-3">Grace Lucchese</a> had just graduated from college. Her partner, Mickey Ricard, had finished his military service two years prior. The Gen Z couple had moved into an apartment in Lucchese's hometown of Sudbury, Massachusetts — a town about 40 minutes outside Boston — and found themselves spending much of their incomes on rent. "We were paying ridiculous <a target="_blank" href="https://www.businessinsider.com/rental-market-housing-affordability-real-estate-apartments-2024-1">prices for rent</a>, and our money was going nowhere," Lucchese told Business Insider. "We also have a dog with special needs, so we wanted to find a home with a backyard." <div type="image" title="Grace Lucchese, Mickey Ricard, and their dog at home." height="1701" width="2268" msid="113465770" hostid="261"></div>For the first-time homebuyers, finding an affordable, well-maintained home in their area was challenging. "During our homebuying search, we looked all around Boston," Lucchese said. "We could not find a home that was move-in ready and under $650,000. We put offers on probably seven different homes and got into bidding wars on two." After months of searching and nearly giving up, Lucchese and Ricard finally found their perfect home: a 1,600-square-foot, two-story Colonial built in 1885 with three bedrooms and one bathroom. The home also came with an assumable mortgage. "Our home was originally listed for $429,000," Lucchese said. "When we were <a target="_blank" href="https://www.businessinsider.com/real-estate-investing-how-to-negotiate-best-price-down-2023-4">negotiating with the seller</a> and trying to talk him down on the price, they brought up the assumable loan — I had no clue what that type of mortgage was." After learning about assumable mortgages and realizing they could take over the homeowner's 2.6% rate, they jumped at the opportunity. <div type="image" title="Grace Lucchese and Mickey Ricard's Massachusetts home." height="3024" width="4032" msid="113465773" hostid="261"></div>In January, they made a $13,000 down payment and bought the home for $422,500. With homeowners' insurance included, their monthly payments are around $2,100 — about half of what they would likely pay if they had gotten a traditional mortgage earlier this year. Their mortgage term is 26 years. The couple, now the youngest homeowners in both of their families, are using their monthly savings to renovate their home and help cover their dog's veterinary expenses. "Now that our assumable mortgage is saving us about $2,000 each month, it makes the stress a little less because we have the option of having more money available," Lucchese said. <h2>Retirees who got a 2.75% rate say their lives are easier</h2>In June, <a target="_blank" href="https://www.businessinsider.com/homebuyer-got-low-mortgage-interest-rate-assumable-mortgage-save-retirement-2024-7">Brian Sankey</a>, a retired military police officer, purchased a $400,000 home in Elizabethtown, Kentucky — a small town south of Fort Knox — with an assumable Veterans Affairs, or VA, mortgage. The loan has a 2.75% interest rate and 26 years remaining on its 30-year fixed-rate term. Sankey said it was "a win-win" situation for him and the seller. "The benefit of a loan assumption for the seller was that it allowed them to sell their home at a higher price," Sankey told BI. "For my wife and me, it allowed us to get a lower interest rate." <div type="image" title="Brian Sankey on the beach." height="1200" width="1600" msid="113465776" hostid="261"></div>Sankey said he learned about the assumption feature of Veterans Affairs mortgages years ago but had forgotten about it over time. It wasn't until he came across the four-bedroom, four-bathroom home in Elizabethtown that his memory was jolted. The home's proximity to an Army base led Sankey to suspect that the sellers might be connected to the military and have taken out a VA loan, making an assumable mortgage possible. He was right. However, getting the seller on board wasn't as easy as Sankey had hoped. "They weren't inclined to do it at first because they felt the assumption process would take too long, and they were looking for a quick sale," he said. "But after about 30 days, they realized that cash buyers wouldn't be throwing money at them and agreed to proceed with the assumption." According to Sankey, the assumption process took just about six weeks from the time he and his wife first viewed the home to closing the loan. "I'm happy I remembered it because it made our home purchase more affordable," he said. "Despite the current market conditions and higher interest rates, my wife and I were able to purchase a larger home with lower monthly payments." A smaller mortgage is allowing Sankey and his wife to <a target="_blank" href="https://www.businessinsider.com/personal-finance/how-much-do-i-need-to-retire">retire more comfortably</a>. "I can now use the money I would have spent on high-interest payments to cover living expenses," Sankey said. "We should also have more discretionary income." <h2>A couple is able to pay down medical debts after buying a house in Oregon</h2>In 2022, <a target="_blank" href="https://www.businessinsider.com/couple-got-low-mortgage-when-everyone-getting-high-interest-rate-2024-3">Amy Yzaguirre</a> was diagnosed with cancer. At the time, she and her son were living in Idaho while her husband looked for a job in Oregon. They had planned to reunite in Oregon after he found one and their Idaho home sold. However, following her diagnosis, the couple decided it was best to be together before the Idaho home was sold. Faced with the financial burden of paying the Idaho mortgage and Oregon rent at the same time, they moved into an RV on her parents' property in Tigard, a suburb about 20 minutes outside Portland. "It was pretty rough, but we made it work," Yzaguirre told BI. They lived rent-free in the RV for months while waiting for their Idaho home to sell and Yzaguirre to recover. Then, they began searching for a home to buy in Tigard. <div type="image" title="Amy Yzaguirre and her husband pose in front of the RV they purchased." height="542" width="720" msid="113465772" hostid="261"></div>It wasn't the experience they had hoped for. "It's funny how an area can be a nice, family-friendly, affordable place to live and then suddenly become overpopulated and much more expensive," she said. They eventually toured a townhome in nearby Sherwood listed for $416,000. The seller's flyer noted that a buyer could take over their 2.5% mortgage rate. "I did the math," Yzaguirre said. "The seller was locked in at 2.5%, so if we qualified to assume the loan, our mortgage would be a little over $2,100 a month versus the over $3,000 we would be paying with a traditional mortgage at current market rates. It would save us over $40,000 in the long run." <div type="image" title="Amy Yzaguirre, her husband, and son." height="3024" width="4032" msid="113465778" hostid="261"></div>In March 2023, the couple purchased the townhome for $418,900. They made a down payment of $48,000 and assumed a 30-year fixed-rate FHA loan with an interest rate of 2.5%. They have 28 years left on their mortgage. The money they are saving each month is helping them pay down Yzaguirre's bills. "Even though I was fortunate to have good insurance during chemotherapy and have excellent insurance through my current job, I still had quite a few medical bills to pay off," she said. "With the extra money we have saved on our mortgage payment, I've been able to pay them down." The family also used some of their extra funds to pay off other debts and purchase a Toyota Tacoma pickup truck with cash, covering the full amount upfront Correction: September 19, 2024 — An earlier version of this story misspelled Mickey Ricard’s last name.

3 couples who recently got mortgage interest rates under 3% share how they did it

With <keyword id="19899478" type="General" weightage="20" keywordseo="US" source="keywords">US</keyword> unemployment rates jumping from 4.1% to 4.3% in July 2024, the highest ever since October 2021, global markets fear an impending <keyword id="19950649" type="General" weightage="100" keywordseo="recession" source="keywords">recession</keyword> and a slowdown hitting the world's largest economy. Amidst a weakening labor market, even as <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> remain consistent at a 23-year peak range of 5.25-5.5%, the number of unemployed people in the US inched up to 7.9 million in July. Between January and June this year, the US economy added an average of 2,22,000 new jobs every month, which were significantly lower than the monthly average of 2,51,000 in 2023, and 3,77,000 in 2022. However, in July, the economy only managed to generate 1,14,000 new jobs. Even Goldman Sachs economists have upped the probability of recession hitting the US by 2025 to 25%, from its previous estimate of 15%. And while they maintain that there still remain "several reasons to not fear a slump", it is hard to overlook the fact that July's employment figures have already breached the Sahm rule, which is considered a tipping point for foreseeing economic slowdowns. But is that indication enough, or are we reading too much into short-term market developments? Lets find out. First, what is this Sahm rule? Named after formed Fed economist Claudia Sahm, the rule says that a recession is almost certain, and more likely already underway, if the <keyword id="20054242" type="General" weightage="20" keywordseo="unemployment-rate" source="keywords">unemployment rate</keyword> (based on a three-month moving average) inches up by 0.5% from its lowest point in the past year. It has been failsafe so far, proving right for every US recession since 1970. But even as Sahm herself, and other economists believes that a recession is not imminent this time around, despite weak employment figures, the ongoing shockwaves in the global markets are hard to ignore. Japan's Nikkei 225 plunged 4,451 points today, and closed the day around 12.4% lower, registering one of the worst losses it has seen since 1987. Closer home, Sensex fell sharply from the 80,000 mark it had previously breached by about 2,500 points to trade at around 78,400.21. Nifty also dipped around 2.5%, and was trading at about 24,098 points. Vishnu Kant Upadhyay, AVP, Research and Advisory at Master Capital Services Ltd notes, the significant domestic equities sell-off has been primarily driven by weak global sentiments following disappointing U.S. economic data, particularly non-farm payrolls, manufacturing PMI, and jobless claims, which have raised concerns about a potential economic slowdown in the world’s largest economy. Additionally, the yen carry trade has further dampened global sentiment. "However, given the prevailing bullish trend, it is unlikely that prices will remain low for an extended period. A recovery from these lower levels is a probable scenario", he continued. Even Anup Kurup, CIO at InCred Global Asset Management sees this as short-term, largely because of the "positioning in the derivative markets with many players selling volatility across many asset classes. A big move up in VIX on Friday after the disappointment in the jobs report would have likely triggered margin calls on the short volume strategies, which were mushrooming off late", he explained. So, what exactly is a recession? This is when a country experiences a temporary decline in its overall economic activity, which has a cascading effect on lowering its GDP, income, sales and employment numbers. Generally, if the a country's GDP continues to fall for two successive quarters, it is said to have entered recession. When there is a recession, individuals and businesses tend to spend less, which further hinders wealth creation, industrial activity and trade, perpetuating the cycle. However, in the first three months of 2024, US household wealth skyrocketed to a record $160 trillion, while household net worth touched $5.1 trillion, largely driven by the significant exposure of Americans to the stock markets, and the subsequent gains. Notably, last recession (2008-09) was marked by ballooning household debt, which grew just 2.19% in the last quarter. So, while a recession might not be immediately on the cards, the upcoming months of September and December, where the Fed is likely to announce significant rate cuts, will be tracked intently. A rate cut would increase money circulation in the economy, thereby boosting spending and countering recession. Transfer Pricing and International Economics subject matter expert Akash Kalra notes that this crash indicates a shift from rapid growth to a slower growth trajectory, rather than an immediate recession. Despite recent weak economic indicators such as higher unemployment claims and soft data in construction, durable goods orders, home sales, and manufacturing, the overall assessment is that the U.S. economy is transitioning to a slower growth rate, which is more vulnerable but not necessarily indicative of a recession. "It is important to note that consumer spending has been growing at a moderate rate. In addition, capital spending remains strong due to robust corporate balance sheets and interest in AI technology. The housing market is subdued but stable, and government spending continues to rise. Trade positions are unfavorable but not deteriorating. The <keyword id="19904332" type="General" weightage="20" keywordseo="Federal-Reserve" source="keywords" meta.keywordsubtype="org" meta.entityname="Federal Reserve" meta.hostid="261" meta.entityid="Federal Reserve">Federal Reserve</keyword> has signaled a potential rate cut in September due to softer economic data and diminishing <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword>. Accordingly, the U.S. GDP growth is expected to slow down for the rest of 2024 before picking up again in 2025", he continues.

With stock markets crashing worldwide, are fears of a recession loading in the US pre-mature?

<keyword id="19991358" type="General" weightage="100" keywordseo="Indian-markets" source="keywords">Indian markets</keyword> are navigating choppy waters as global economic shifts, from rate cuts to evolving political climates, create new pressure points across the financial landscape, according to a recent report by ANI attributed originally to the Union Bank of India. The domestic stock and bond markets showed signs of strain, with <keyword id="19910363" type="General" weightage="20" keywordseo="bond-yields" source="keywords">bond yields</keyword> witnessing slight adjustments. India’s 10-year government bond yield dipped to 6.82%, a decrease from the previous session, reflecting cautious investor sentiment as the markets react to shifting global indicators. Meanwhile, the 5-year bond yield remained steady at 6.76%, a signal of lingering hesitation amid economic unpredictability. In the currency market, the rupee faced a notable decline, ending the day at ₹84.3725 against the US dollar, slipping from its prior close of ₹84.2800. Market analysts point to significant capital outflows as a key factor, with investors moving funds to perceived safer assets overseas. This migration has weighed heavily on the rupee, underlining the currency’s vulnerability in an environment of global economic flux. India’s stock market bore the brunt of this volatility, with key indices falling over 1%, effectively erasing the gains of a previous rally. This abrupt drop reportedly reflects renewed investor anxiety, largely triggered by the recent <keyword id="20189882" type="General" weightage="20" keywordseo="US-presidential-election" source="keywords">US presidential election</keyword> results. Experts suggest that the election has introduced a fresh layer of uncertainty, not only for the US economy but for global markets, impacting everything from policy decisions to investor sentiment. Analysts are also keeping a close eye on upcoming decisions by central banks, which will likely shape the path forward for the Indian equities market. Commodities showed contrasting trends, with Brent crude prices falling on lower demand expectations, as economic indicators point toward cautious spending globally. Gold, on the other hand, experienced a modest rise as investors sought refuge in safe-haven assets, highlighting a shift towards risk aversion among market participants. Globally, major central banks made coordinated efforts to sustain economic growth, with the Bank of England (BoE) announcing a 25 basis-point cut, lowering its benchmark rate to 4.75%. The BoE’s Monetary Policy Committee (MPC) largely backed this move to counter inflation, which has been declining, albeit gradually. Across the Atlantic, the US Federal Reserve mirrored this action with its own 25 basis-point cut, a sign of confidence in the ongoing economic recovery. Both rate cuts, though modest, signal a global trend towards caution as economies work to balance growth with stability. In Asia, the People’s Bank of China (PBoC) maintained its supportive stance. Governor Pan Gongsheng sought to reassure foreign investors by reaffirming the PBoC’s commitment to growth-oriented policies. Pan emphasized enhanced communication and pledged to open China’s financial services sector further, aiming to attract more international participants. Europe, meanwhile, faced mixed economic signals. Germany reported a steep 2.5% drop in industrial production in September, signalling a slowdown in manufacturing, while the Eurozone saw a mild 0.5% rise in retail sales, reflecting cautious consumer optimism in the region. Adding another layer to the global economic landscape, the European Union’s Climate Change Service warned that 2024 could be the hottest year on record, underscoring urgent climate challenges just as the UN COP29 climate summit approaches. The summit, set to take place in Azerbaijan, aims to rally increased funding for climate action, though tempered expectations linger in light of recent US political shifts. On the domestic front, Niti Aayog CEO BVR Subrahmanyam spoke about India’s potential role in pivotal global trade agreements, specifically the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These partnerships, Subrahmanyam suggested, could bolster India’s Micro, Small, and Medium Enterprises (MSME) sector, which currently accounts for 40% of India’s exports, offering a strategic advantage for Indian trade in an interconnected world. As the Indian markets digest these developments, experts believe continued volatility could be the theme for the coming months. (with ANI inputs)

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