The anticipated rate cuts in 2025 and in 2026 are expected to boost the valuations of risky assets.
FinTech BizNews Service
Mumbai, September 18, 2025: The U.S. Federal Reserve has lowered interest rates by 0.25%, the first cut since December 2024. The Federal Reserve has cut its key overnight interest rate by 25 basis points to a 4.00-4.25% range,
Industry Leaders express their useful views US FOMC announcement:
Nachiketa Sawrikar, Fund Manager, Artha Bharat Global Multiplier Fund:
The Fed’s neutral rate for the U.S. economy is estimated at about 3.25%. In 2024, the U.S. FRB reduced the Federal Funds Rate from 5.375% to 4.375%. Today, after an extended pause, they cut it again from 4.375% to 4.125%. More importantly, the Fed signalled two additional rate cuts in 2025, which would bring the Federal Funds Rate down to 3.625% by year-end, still slightly ahead of the neutral rate. There is more room to cut rates in 2026.
Historically, when the Fed lowers rates, capital tends to shift out of safe assets such as U.S. Treasuries and bank deposits into riskier assets, including equities, private equity, venture capital, and emerging markets. The anticipated rate cuts in 2025 and in 2026 are expected to boost the valuations of risky assets.
As a result, India should expect stronger capital inflows—particularly in Q4, when large global asset managers finalize allocations. This comes at a time when the Indian economy is demonstrating resilience, even in the face of headwinds such as the Trump administration’s imposition of a 50% tariff on Indian exports. Overall, India stands to benefit from a “double engine” of global liquidity easing and strong domestic fundamentals.
Viram Shah, Founder & CEO, Vested Finance:
The U.S. Federal Reserve has lowered interest rates by 0.25%, the first cut since December 2024. This carries a big signal: the Fed is worried that the U.S. economy
is losing steam, even though inflation is not fully under control yet.
Why did they do it?
The job market is cooling. Fewer people are being hired, and unemployment is creeping up.
Inflation is easing but still stuck around 3%, above the Fed’s 2% comfort zone.
Growth is showing signs of fatigue. The cut is meant to act as insurance—to support jobs and spending before things weaken further.
Inside the Fed, there was debate. Governor Stephen Miran actually wanted a bigger 50 bps cut, arguing that the slowdown needed stronger medicine. Most
others voted for the smaller 25 bps move, cautious about cutting too fast while prices remain sticky. The Fed also hinted that more cuts could follow later this year, depending on how jobs and inflation data unfold.
How did markets take it?
Investors had already expected a small cut, so the reaction was muted. Stocks moved sideways, bond yields ticked up, and the dollar strengthened a bit. Still, the bigger picture is that easier policy usually supports equities over time, especially if more cuts are coming.
What does this mean for Indian investors?
If you invest in U.S. stocks, this is broadly good news. Lower rates make equities more attractive than bonds, and global investors often respond positively. The only watch-out is currency: a weaker dollar could trim some of the rupee returns.
The Fed’s move shows a shift in priorities - jobs and growth are now weighing as much as inflation in the decision-making. For Indian investors with U.S. exposure, this creates a more supportive environment for equities, even if currency movements eat into some returns. The key will be how quickly the Fed follows up with more cuts if the economy slows further.”
Abhishek Bisen, Head- Fixed Income, Kotak Mahindra AMC:
The Federal Reserve has cut its key overnight interest rate by 25 basis points to a 4.00-4.25% range, citing increased downside risks to employment while noting that inflation remains somewhat elevated. With projections for an additional 50 basis points of cuts by year-end and 25 basis points in each of the next two years, the Fed is carefully addressing its dual mandate, despite new Governor Miran’s dissent favoring a 50-basis-point cut. This is marginally dovish vs expectation and hence 10 yr UST moved below 4.”
