US Fed meeting in focus: Will rate reduction signals increase market sentiment? | Einsmark news

Amid the buzz around tariff negotiations and quarterly earnings, investors’ attention has now shifted to the US Federal Open Market Committee (FOMC) meeting, which is scheduled on July 29 to 30, even because the markets expect interest rates to remain unchanged. US Reserve Chairman Jerome Powell is expected to repeat what he said in several recent policy meetings – that the Fed will respond to inbound data and the developing economic situation. The US Central Bank last decreased by 25 basis points on December 18, 2024, bringing the federal fund rate to a series of 4.25 percent to 4.50 percent. Since then, the Fed has maintained a break despite strong pressure from President Donald Trump to further lower the rates. Fed’s focus is on the tariff-led uncertainty that most Fed officials think that the real impact of Trump’s rates will be seen in the coming months, and that an early rate cut will damage the Fed’s efforts to lower inflation. However, in the recent past, the US has finalized trade agreements with several major economies, including Japan and the European Union. Tariff negotiations continue with China and India. It will be interesting to see how the Fed considers these developments in its policy assessment. In its last policy meeting in June, the Fed revised its growth and inflation forecast and marked an increased risk of inflation due to Trump’s rates. The Fed projected the GDP growth of 1.4 percent in 2025, by 0.3 percent lower than the March meeting. At the end of the year, it sees unemployment rising to 4.5 percent and inflation at 3 percent, far above the current level. The US economy has shown strong resilience so far. However, the actual impact of rates is not yet visible as Trump has extended the rate date for many countries until August 1. In addition, some experts have emphasized that some kind of pre -seller and inventory stock took place earlier in the cycle, and that the inventory is still consumed, which keeps the US economy in good shape. “Unlike earlier expectations, the US economic data remains strong. One possible reason is that pre -seller and stock supply occurred earlier in the cycle, and that inventory is still being consumed. The expected effects of higher inflation and growth of growth have not yet been realized,” Pankaj Pandey, the head of research at ICIC Securities. Can rate reduction signals increase market sentiment? According to experts, this time the markets are largely in a break and a rate reduction in September. Thus, the market may not see any significant movement due to the Fed’s policy outcome. However, a Dovish Fed could weaken the US dollar, which could cause some inflow of foreign capital to emerging markets such as India. “The US Federal Reserve is expected to interrupt the rate hikes and is likely to be avoided chasing cuts. The earliest possible timeline for rate cuts could be September. The upcoming July policy meeting could be a non-event for the markets, as a break has already been largely priced,” G Chokelingam, the founder and research head at Equinomics Research Private Limited, has a similar view. “The Fed policy will not affect the Indian market because a break is largely discounted and the Fed may not give clear signals about rate cuts,” Chokelingam said. Chokelingam underlines that the Fed will wait a few months to see how Trump’s rates affect the inflation track. Despite trading transactions, tariff rates remain relatively high on imports to the US. This means that the risk of inflation rising again is real. At this time, the biggest trigger for the market is an Indian – US trading agreement. The agreement is delayed because India is reluctant to open its markets for US agricultural, dairy and genetically modified (GM) products, which can negatively affect the livelihoods of its farmers. Read all market -related news here read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or brokerage firms, not coin. We advise investors to consult with certified experts before making investment decisions, as market conditions can change quickly and conditions can vary.