US Fed Meeting Live Updates: Powell-led FOMC slashes key interest rate by 50 bps

US Fed Meeting Live: US dollar hits 14-month low after US Fed delivers 50 bps rate cut

The US dollar dropped after the Federal Reserve on Wednesday cut interest rates by half a percentage point. The dollar index was last down 0.53 per cent on the day at 100.37, the lowest since July 2023. The euro gained 0.55 per cent to $1.117575. The greenback weakened 1.07 per cent to 140.825 Japanese yen.

US Fed Meeting Live: US Fed independence ‘good for the public’, says Powell

The US Federal Reserve’s independence from politics “has been good for the public,” Fed Chair Jerome Powell told reporters Wednesday, adding that he hopes and believes that this arrangement will continue.

“We’re not serving any politician, any political figure, any cause, any issue, nothing,” Powell said in response to a question about Fed independence. Republican presidential candidate Donald Trump recently suggested the US president should have “at least” a say over Fed decisions.

US Fed Meeting Live: Canadian dollar hits 12-day high as Fed opts for supersized rate cut

The Canadian dollar strengthened against its US counterpart on Wednesday as the Federal Reserve cut interest rates by half a percentage point, but the move was limited as investors raised bets the Bank of Canada would step up the pace of its easing.

The loonie was trading 0.3 per cent higher at 1.3560 to the US dollar, or 73.75 US cents, after touching its strongest level since September 6 at 1.3542. Wall Street rose, bond yields eased and the US dollar extended recent declines against a basket of major currencies.

Canadian bond yields eased across the curve. The two-year was down 3.3 basis points at 2.889 per cent, moving closer to the two-year low it touched during Tuesday’s session at 2.845 per cent.

US Fed Meeting Live: Powell says Fed might have launched rate cuts in July had it seen July jobs report

The US Federal Reserve might have first cut interest rates in late July had it seen the jobs report for the month, released days later, that showed softening in the US labor market, Chair Jerome Powell said on Thursday.

“If you ask, you know, if we’d gotten the July report before the meeting, would we have cut? We might well have,” Powell told a news conference after the Fed cut rates by 50 basis points. “We didn’t make that decision, but you know, we might well have.”

US Fed Meeting Live: Fed board member Michelle Bowman dissents on 50 bps cut

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Lisa D. Cook; Mary C. Daly; Beth M. Hammack; Philip N. Jefferson; Adriana D. Kugler; and Christopher J. Waller. Voting against this action was Michelle W. Bowman, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting. Read full text of FOMC statement here

US Fed Meeting Live: Bitcoin edges higher after US Fed delivers 50 bps rate cut

Bitcoin edged higher after the Federal Reserve reduced borrowing rates for the first time since the Covid pandemic paralyzed the economy more than four years ago and helped cryptocurrencies break into the mainstream.

The original digital asset gained about 1.4 per cent to $60,989, while smaller tokens were mixed. Lower rates usually help to spur an increase in demand for riskier assets. Bitcoin has been trading within a relatively narrow range since setting a record high of almost $74,000 in March.

US Fed Meeting Live: Powell says ‘nothing’ political discussed in Fed rate meeting

US Federal Reserve policymakers discuss “nothing else” but how to serve the public as it meets on interest rates, Fed Chair Jerome Powell said Wednesday, when asked about potential criticism that cuts have political motivations.

“Our job is to support the economy on behalf of the American people, and if we get it right, this will benefit the American people significantly,” Powell told a press conference. “We don’t put up any other filters.”

US Fed Meeting Live: Wall Street advances after Fed cuts rates 50 basis points

US stocks briefly shot higher on Wednesday after the Federal Reserve cut interest rates by 50 basis points, the high side of estimates for its first cut in more than four years. 

Trading was choppy. Prior to the announcement, the S&P 500 oscillated between modest gains and losses. The benchmark rose as much as one per cent after the announcement before paring gains.

The Dow Jones Industrial Average rose 103.40 points, or 0.25 per cent, to 41,709.58, the S&P 500 gained 22.31 points, or 0.40 per cent, to 5,656.89 and the Nasdaq Composite gained 132.71 points, or 0.75 per cent, to 17,760.77.

Borrowing costs had been parked at their highest levels in over two decades since July 2023, when the central bank last hiked interest rates by 25 basis points to between 5.25 per cent and 5.50 per cent to combat inflation.

US Fed Meeting Live: Wall Street reacts to ‘dovish’ first US Fed rate cut in four years

Traders added to bets on further easing by the Federal Reserve, US stocks eyed record highs and the dollar ticked lower after the US central bank cut interest rates by a half-point in its first reduction in four years.

Fed officials’ so-called dot plot, detailing officials’ projections for the path of monetary policy in the months ahead, showed a further 50 basis points of easing slated for this year. Yet markets now suggest the Fed will cut at least another 72 basis points. In the immediate aftermath, short-end Treasuries rose, the S&P 500 Index held gains and a Bloomberg gauge of the dollar slumped.

The move brings to an end weeks of speculation about whether the Fed would kick start its easing cycle with a quarter- or half-point cut. Traders were pricing a roughly even chance of each outcome in the immediate run-up to the decision.

US Fed Meeting Live: Fed’s Powell says not thinking about stopping runoff of Fed’s balance sheet

The Federal Reserve is not considering stopping the runoff of its balance sheet and can do that and cut rates at the same time, as reserves remain stable, Fed Chair Jerome Powell said on Wednesday. Powell told a news conference that recent shrinkage of the Fed’s balance sheet has largely been from overnight borrowings. 

“I think what that tells you is we’re not thinking about stopping runoff because of this at all. We know that these two things can happen side by side. In a sense, they’re both a form of normalization, and so for a time, you can have the balance sheet shrink but also be cutting rates.”

US Fed Meeting Live: Powell says first rate cut marks ‘beginning’ of a process

The US Federal Reserve’s first interest rate cut since 2020 marks the start of a broader process of adjusting policy as inflation cools, Fed Chair Jerome Powell told reporters Wednesday. “We know that it is time to recalibrate our policy to something that is more appropriate given the progress on inflation and on employment,” Powell said.

US Fed Meeting Live: Gold hits record high after US Fed delivers 50 bps rate cut

Gold prices rose to an all-time high on Wednesday after the U.S. Federal Reserve cut interest rates by 50 basis points, sending the dollar lower.

Spot gold was up 0.9 per cent at $2,592.39 per ounce as of 02:17 p.m. ET (1817 GMT). US gold futures settled 0.2 per cent higher at $2,598.60.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

Following the Fed’s cut, the dollar fell 0.5 per cent – to its lowest since July 2023 against its rivals. Meanwhile, spot silver rose 0.6 per cent to $30.93 per ounce, after hitting a two-month high on Monday. Platinum was steady at $981.10 per ounce. Palladium was down 3.2 per cent at $1,081.00.

US Fed Meeting Live: US yield curve hits steepest in more than two years

The US Treasury yield curve on Wednesday reached its steepest level since July 2022, after the Federal Reserve cut interest rates by 50 basis points (bps), a larger-than-usual rate reduction as the central bank grappled with a weakening labor market.

The spread between US two- and 10-year yields hit as wide as 10.2 bps and was last at 8.6 bps. A steeper curve suggests more easing is on the way. The Fed said it has gained greater confidence that inflation is moving sustainably toward its two per cent goal and that the risks between prices and employment are roughly in balance.

US Fed Meeting Live: FOMC statement on economic outlook

“The Committee seeks to achieve maximum employment and inflation at the rate of two per cent over the longer run. The Committee has gained greater confidence that inflation is moving sustainably toward two per cent, and 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 added in its statement, “In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. “

“The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”

US Fed Meeting Live: FOMC statement on policy rates

“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 per cent. 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 will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.”

US Fed Meeting Live: US Fed sees additional 50 bps rate cut by end of 2024, more lined up in 2025, 2026

Fed Policymakers see the Fed’s benchmark rate falling by another half of a percentage point by the end of this year, another full percentage point in 2025, and by a final half of a percentage point in 2026 to end in a 2.75 per cent -3 per cent range.

US Fed Meeting Live: Powell-led FOMC cuts rates by 50 bps to 4.75-5% for first time in four years

The US Federal Reserve has cut its key lending rate by half a percentage-point Wednesday in its first reduction since the pandemic, sharply lowering borrowing costs shortly before November’s presidential election.

Policymakers voted 11-to-1 in favor of lowering the US central bank’s benchmark lending rate to between 4.75 per cent and 5.00 per cent, the Fed announced in a statement. They also penciled in an additional half-point of cuts before the end of the year.

US Fed Meeting Live: Wall Street slips ahead of US Fed policy verdict, Dow Jones sheds 100 points

Wall Street’s main indexes slipped in volatile trading on Wednesday ahead of the Federal Reserve’s highly anticipated first interest rate cut in more than four years, with jitters over the magnitude of the reduction dominating mood.

Borrowing costs have stayed at their highest levels in over two decades since July 2023, when the central bank last hiked interest rates by 25 basis points to between 5.25 per cent and 5.50 per cent to combat inflation. But the focus recently has moved to a moderating labor market.

At 12:04 p.m., the Dow Jones Industrial Average fell 101.36 points, or 0.24 per cent, to 41,504.82, the S&P 500 lost 15.32 points, or 0.27 per cent, to 5,619.26 and the Nasdaq Composite lost 68.11 points, or 0.39 per cent, to 17,559.95.

Eight of the 11 S&P 500 sectors slipped, although healthcare edged up 0.1 per cent.The Russell 2000 index, tracking small caps, also dipped 0.2 per cent, while the CBOE Volatility index hit a one-week high and was last up 1.53 points at 19.14.

Still, the benchmark S&P 500 and the blue-chip Dow are trading just shy of their respective record highs ahead of the Fed decision, expected at 2:00 p.m. ET.

US Fed Meeting Live: Oil trades 1% lower after mixed storage data ahead of US Fed verdict; Brent crude at $73, faces resistance $75/bbl

International crude oil prices fell on Wednesday as the market cautiously awaited a rate cut announcement from the US Federal Reserve, while investors digested a mixed crude and fuel storage report out of the United States.

Brent crude futures for November lost 55 cents, or 0.8 per cent, at $73.15 a barrel. US crude futures for October shed 53 cents, or 0.7 per cent, to $70.66.

Crude inventories fell by 1.6 million barrels to 417.5 million barrels in the week ending September 13, said the Energy Information Administration (EIA) 

Brent has staged a recovery since falling below $70 to its lowest since December 2021 on September 10. It faces resistance at around $75 due to weak global refinery margins that signal sluggish demand.

US Fed Meeting Live: European Stocks drop ahead of Fed’s rate decision; Novo slips

European stocks fell as attention turned to the Federal Reserve’s highly anticipated interest-rate decision and any signals on its policy outlook. Novo Nordisk A/S shares slipped on worries that Ozempic could be targeted for a US price cut.

The Stoxx Europe 600 Index was down 0.4 per cent at 9:38 a.m. in London. Technology and health care stocks lagged, while autos and banks outperformed.

Novo Nordisk fell two per cent as it said its blockbuster diabetes shot Ozempic was “very likely” to be one of the next drugs targeted for a price cut in bargaining with the US government’s Medicare program.

Europe’s benchmark gauge has had a volatile recovery from the summer selloff, as the prospect of monetary-policy easing hasn’t fully tempered signs of an economic slowdown. The index still stands about two per cent below its August record high.

After the European Central Bank reduced rates last week, focus Wednesday is on the Fed’s policy meeting, where officials are expected to lower rates for the first time in four years. Traders are split between wagers on a 25- and 50-basis point reduction, according to swaps data.

US Fed Meeting Live: Gold edges higher as markets gear up for Fed’s rate verdict

Gold prices edged higher on Wednesday as investors are widely expecting the US Federal Reserve to deliver its first interest rate cut in more than four years later in the day.

Spot gold rose 0.1 per cent to $2,570.79 per ounce as of 12:20 p.m. ET (1620 GMT), hovering below a record high of $2,589.59 hit on Monday. US gold futures were up 0.2 per cent to $2,597.80.

Spot silver fell one per cent to $30.39 per ounce, after hitting a two-month high on Monday. Platinum eased 0.8 per cent to $974.05. Palladium was down 4.8 per cent at $1,062.06.

US Fed Meeting Live: D-Street experts see 25 bps rate cut by US Fed

Rohit Arora, CEO and Co-founder, Biz2Credit and Biz2X:

“Right now, asset prices are high, with housing affordability at its lowest in over 10 years, and job losses are rising in key areas like tech and retail. Consumer demand has dropped sharply, with retail sales falling by three per cent last quarter, creating a recession-like environment. 

Inflation is still high, cutting into people’s spending power and slowing the economy. It’s expected that the Fed will lower interest rates by 25 bps to help counteract the economic slowdown—GDP growth is down to 1.2 per cent—and to offer some relief to the struggling job market.”

US Fed Meeting Live: What India’s latest inflation print suggests

Ranen Banerjee- Partner and Leader Economic Advisory, PwC India:

“The lower than expected WPI number is primarily owing to a fall in fuel and electricity components as global crude prices have softened given the Chinese demand worries as well as headwinds in Europe and US. The vegetables component has also dropped significantly that is expected given the boost in production that takes place during monsoon months. 

However, extremely high inflation prints of onion and potato does not bode well for the thalinomics as the food prices and hence the thali prices of the population will see upward price pressures. This is also the worry that has been expressed by the RBI Guv on the food inflation risk continuing. The high intensity of rainfall in many areas and extent of consequent damages to crops will determine the food inflation trajectory and hence we can expect the MPC to be cautious and continue with its pause on policy rates in its next meeting.”

US Fed Meeting Live: US Fed set to announce first rate cut in four years: How will it impact India’s RBI policy? Experts weigh in

D-Street analysts said that the likelihood of the Federal Reserve opting for a substantial 50-basis point rate cut in September hinges on the central bank’s assessment of the employment and inflation balance leading up to the meeting. Although indicators suggest a potential rate decrease, the odds of such a significant cut are still uncertain.

‘’The strongest tail wind comes from the expected rate cuts by the Fed which will spill over to other central banks including the RBI. The Indian economy now needs monetary stimulus through rate cuts and this is likely in the next policy meeting,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Market experts also say the recent shift in foreign investors’ stance towards the domestic market and the anticipation that the RBI will align with the Fed’s actions are expected to foster a positive outlook for the Indian stock market in the near term.

‘’Currently, traders estimate a 38 per cent chance of a 50-basis point reduction, up from an earlier expectation of 33 per cent, while a 25-basis point cut has a 62 per cent probability. In response to a potential Fed rate cut, Indian stocks that may benefit include those in the IT, BFSI (Banking, Financial Services, and Insurance), Auto, and Realty sectors,” said Palka Arora Chopra, Director of Master Capital Services Ltd.

According to Chopra, a Fed rate reduction typically weakens the US dollar, increases liquidity, and lowers borrowing costs, positively impacting these sectors. 

‘’The rate cuts will be welcomed positively by the Indian market because the RBI is following the US Fed’s lead when it comes to interest rates, and their announcements will spur additional rate cuts in India, which will enhance liquidity, attract capital inflows, and strengthen the value of the rupee,” added Chopra.

US Fed Meeting Live: Gold edges higher as markets gear up for Fed’s rate verdict

Gold prices edged higher on Wednesday as investors are widely expecting the US Federal Reserve to deliver its first interest rate cut in more than four years later in the day. Spot gold rose 0.1 per cent to $2,570.79 per ounce, hovering below a record high of $2,589.59 hit on Monday. 

US gold futures were up 0.2 per cent to $2,597.80. Spot silver fell one per cent to $30.39 per ounce, after hitting a two-month high on Monday. Platinum eased 0.8 per cent to $974.05. Palladium was down 4.8 per cent at $1,062.06.

US Fed Meeting Live: Nifty IT index posts worst intraday performance in six weeks

The sharp drop in the large-cap IT stocks has led the Nifty IT index to plunge by 3.02 per cent to 41,814 points, falling below the 42,000 mark for the first time since September 9. Today’s drop in the index was the biggest intraday drop in six weeks, and also this decline has pushed the index to a two-week low.

The significant decline in IT stocks observed today is mainly due to profit-taking by investors after a strong rally over recent months. Since June, IT stocks have experienced a bullish trend, with the Nifty IT index rising by 32 per cent from June to August, leading investors to lock in profits.

This profit booking occurred ahead of the anticipated US Federal Reserve rate-reduction cycle, expected to start on September 18. With easing inflation and a cooling labour market in the US, investors are preparing for this policy shift. Market expectations had priced in a 25-basis point cut, with some anticipating a more substantial 50-basis point reduction, which analysts believe could spur a rally in stocks.

US Fed Meeting Live: London stocks drop after inflation data, focus shifts to Fed

British stock indexes dropped on Wednesday as investors reined in bets on interest rate cuts by the Bank of England, while global risk sentiment was fragile ahead of a policy decision from the US Federal Reserve later in the day.

The blue-chip FTSE 100 ended 0.7 per cent lower, racking up the steepest losses among European peers, while an index of midcap stocks was down 0.5 per cent. Both the indexes closed at their highest since early September on Tuesday.

UK annual consumer price inflation was steady at 2.2 per cent in August, in line with forecasts, data showed. However, services inflation – a figure closely watched by the Bank of England – rose to 5.6 per cent, slightly more than forecast.

The British pound rose against the dollar following the inflation data, which further pressured the FTSE 100’s export-focused companies. Evidence of persistent inflationary pressures led traders to trim bets on the BoE cutting rates at its Thursday meeting, where policymakers are expected to keep rates on hold.

US Fed Meeting Live: Bridgewater Associates LP founder Ray Dalio downplays next Fed move as investors flag China risks

The size of the Federal Reserve’s interest rate cut this week won’t be a game changer for global investors. However, risks from China’s slowdown continue to weigh on their minds, according to participants at a regional forum.

Bridgewater Associates LP founder Ray Dalio said what the Fed will do this week “doesn’t make a difference” over the longer term as policymakers will ultimately need to keep real interest rates low to allow servicing of mounting debts.

“The Fed has to keep interest rates high enough to satisfy the creditors that they are going to get a real return without having them so high that the debtors have a problem,” Dalio told Bloomberg Television’s Haslinda Amin on the sidelines of the Milken Institute Asia Summit 2024 in Singapore on Wednesday.

Investors have expressed concern over a slowdown in China, which pressures authorities to respond with fiscal and monetary stimulus so the world’s second-largest economy can hit its growth target of around five per cent.

In August, China’s industrial output marked its longest slowing streak since 2021, with consumption and investment weakening more than expected. The People’s Bank of China signalled that fighting deflation would become a higher priority and indicated more monetary easing ahead.

Dalio said a small part of his family office’s portfolio remains invested in China, but he pointed out that the country has “real issues.” “There’s a small percentage of our portfolio in China, and we’ll stay in China through this process,” he said, adding that the country remains a “very attractively priced place” to invest in.

US Fed Meeting Live: Indian stock market today– Nifty 50, Sensex declined in choppy trade, IT stocks plummet

Indian frontline indices remained range-bound in volatile trading on Wednesday as investors chose to stay cautious ahead of the crucial US Federal Reserve meeting. The announcement of the first rate cut in four years is anticipated. 

The market experienced a tug-of-war between declining IT stocks and resilient financial shares. A sharp drop in IT stocks heavily impacted the market, pulling the frontline indices down. Additionally, pharmaceutical stocks also faced significant declines.

Amid the volatility, Nifty 50 concluded the session with a slight drop of 0.16 per cent, ending at 25,377 points. During trading, the index reached a new all-time high of 25,482 points, approaching the 25,500 level. Similarly, the S&P BSE Sensex finished the day at 82,948 points, marking a 0.16 per cent decline from its previous close. The index also achieved a new record high of 83,326 points.

On the other hand, small and midcap stocks underperformed the benchmark indices in Wednesday’s trade. The Nifty Midcap 100 dropped to 59,752 points, a 0.71 per cent fall, while the Nifty Smallcap 100 index tumbled by 0.64 per cent to 19,389 points.

Commenting on today’s market performance, Vinod Nair, Head of Research at Geojit Financial Services, said, “The Indian market experienced a minor profit booking with underperformance by midcaps. Mixed signals from global markets emerged ahead of the anticipated FOMC rate cut decision, seemingly priced in a 25-bps cut.”

“Investors assess the potential for a short-term underperformance of equity given the elevated valuation and correction of metal prices. Commodities, including oil prices, are steadily declining, suggesting a potential tempering of economic growth. Investor caution is evident as gold prices rise, likely due to anticipated dollar weakness following the rate cut,” Nair added.

US Fed Meeting Live: Oil prices edge higher on US crude stocks; market awaits Fed decision

Oil prices were up on Wednesday on falling crude inventories in the United States, whiles the market cautiously awaited rate cut details from the Federal Reserve.

Crude inventories fell by 1.6 million barrels to 417.5 million barrels in the week ending Sept. 13, the Energy Information Administration (EIA) said, compared with analysts’ expectations in a Reuters poll for a 500,000-barrel draw. Gasoline and distillate inventories, meanwhile, rose last week.

Brent crude futures for November rose 11 cents, or 0.2 per cent, at $73.81 a barrel. US crude futures for October gained 21 cents, or 0.3 per cent, to $71.40.

Oil found some support from risks of increased violence in the Middle East disrupting supply after Hezbollah accused Israel of attacking the militant group with explosive-laden pagers in Lebanon. Hezbollah promised to retaliate against Israel, whose military declined to comment on the blasts.

Brent has staged a recovery since falling below $70 to its lowest since December 2021 on Sept. 10. It faces resistance at around $75 due to weak global refinery margins that signal sluggish demand, he added.

US Fed Meeting Live: Low US Fed rates to be beneficial for homeowners, say experts

Swapnil Aggarwal, Director, VSRK Capital:

“The forthcoming Federal Reserve meeting on September 17-18, 2024, generated a lot of anticipation, with many expecting a 0.25 basis point rate reduction. Lower interest rates often make borrowing cheaper, 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.

Historically, a rate cut has often fueled optimism in the stock market, as it reduces corporate borrowing costs and increases consumer spending power. 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. Conversely, if the Fed is cutting rates due to low inflation and a stable growth outlook, markets may rally in response to the more favourable borrowing environment. All eyes are on the Fed as it navigates this complex economic landscape.”

US Fed Meeting Live: Euro zone bond yields edge up as Fed decision looms

Euro zone bond yields inched higher on Wednesday but investors were cautious ahead of the long-awaited Federal Reserve interest rate decision due later in the day, which is likely to generate a significant market reaction.

Germany’s 10-year bond yield was up 4.5 basis points at 2.19 per cent, its highest since Sept. 9, though the benchmark for the euro zone bloc has broadly been trending lower in recent months as rate cuts by global central banks gather pace.

The Fed meeting is the focus for European markets, which have been highly responsive to data and policy decisions from the US in recent months. Final euro zone inflation data for August came in largely in line with expectations, and did little to move bonds.

Market pricing shows little chance of a European Central Bank rate cut in October, but a 25 bps cut is fully priced in by December, on top of the cuts in June and earlier in September.

Italy’s 10-year government bond yield was up 6 bps at 3.57 per cent, and the gap between Italian and German 10-year yields was 138 bps. Germany’s two-year bond yield, which is more sensitive to European Central Bank rate expectations, rose 2.5 bps to 2.26 per cent.

US Fed Meeting Live: US Fed rate cuts to bring down borrowing costs for US companies: Experts

Shashank Pal – Chief Business Officer, PL Wealth Management:

“The world’s largest economy is expected to cut rates for the first time in four and a half years amidst fears of an oncoming recession. The US retail sales rose by 0.1 per cent in August, defying expectations of a 0.2 per cent decline. This is as the inflation has moved close to its target of two per cent.

This rate cut by Fed will bring down the borrowing costs of US companies and also push central banks across the world to relook at their own monetary policy this week. The debate is still out in the open, though tilted in favor of a 50 bps cut, with almost a 67 per cent probability. 

A 50 bps cut may cause a short-term spurt in our domestic stock prices only to realign after possibly four to six weeks. Let’s keep our fingers crossed on this as our own Central Bank too is going to watch this event very closely and take clues.”

US Fed Meeting Live: Toronto stocks fall ahead of Fed’s interest-rate decision

Canada’s main stock index fell on Wednesday due to losses in energy shares, even as markets braced for the US Federal Reserve’s monetary policy decision due later in the day. The Toronto Stock Exchange’s S&P/TSX composite index was down 105.02 points, or 0.44 per cent, at 23,572.68.

Lower U.S. interest rates tend to benefit zero-yield gold and other dollar-denominated commodities, and that could boost Canada’s resource-heavy stock market. The TSX has risen 12.6 per cent this year following three rate cuts by the Bank of Canada as well as hopes of Fed’s policy easing.

Energy companies led losses among sectors with a 1.1 per cent fall tracking oil prices, while TSX’s economically sensitive industrials sector declined 0.7 per cent. Among individual stocks, shares of Rogers Communications fell 2.6% after the Canadian telecommunication firm said it would buy Bell’s stake in Maple Leaf Sports & Entertainment for C$4.7 billion

US Fed Meeting Live: US dollar edges lower as traders await Fed rate cut decision

The US dollar edged lower against major currencies on Wednesday, giving up some of its overnight gains, as traders braced for the Federal Reserve’s much-anticipated decision to cut interest rates.

The US central bank is expected to deliver its first interest rate cut in more than four years at 1800 GMT, with markets pricing a 61 per cent probability of a 50 basis point cut and 39 per cent chance of a 25 basis point cut.

Against the Japanese yen, the dollar weakened 0.46 per cent to 141.75 after reaching as high as 142.405 in Asia hours. The Bank of Japan will decide on interest rates on Friday. The euro strengthened 0.20 per cent against the greenback to $1.11380. The dollar was also down 0.4 per cent against the Swiss franc to 0.844.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.18 per cent to 100.73. China’s markets resumed trade on Wednesday after the mid-autumn festival break, with the yuan down 0.4 per cent at 7.0824 per dollar in offshore trading.

Sterling, the best performing G10 currency of the year, gained at $1.32540, with its rally being driven by signs of a steadying UK economy and sticky inflation. British inflation stood at an annual rate of 2.2 per cent in August, unchanged from July. The Bank of England is expected to leave rates unchanged on Thursday.

US Fed Meeting Live: Wall Street trades flat, US dollar lower as traders brace for Fed easing

Wall Street’s main stock indexes were broadly flat in early trade on Wednesday and the dollar weakened as traders weighed up the odds that the Federal Reserve’s expected decision to cut interest rates for the first time in more than four years later in the day delivers a supersized move.

Financial markets are fully pricing in a quarter-percentage point rate cut, while the odds of a more unusual half-point cut stood at 63 per cent by Wednesday, according to LSEG data, up from as little as 14 per cent a week ago.

The Dow Jones Industrial Average fell 0.16 per cent, to 41,537.83, the S&P 500 0.03 per cent, to 5,633.04 and the Nasdaq Composite ticked up 0.07 per cent, to 17,638.87. MSCI’s index of world stocks fell 0.82 points, or 0.10 per cent, to 827.88 after having touched a two-week high a day earlier, just below an all-time high.

The US currency edged lower, handing back some of the gains it made on Tuesday, when unexpectedly robust US retail sales data was interpreted as weakening the case for aggressive Fed easing. The US dollar index, which measures the greenback against a basket of currencies including the yen and the euro fell 0.13 per cent to 100.78.

US Fed Meeting Live: US Fed to cut rates by 25 bps; may trigger temporary rally in Indian market: Amit Goel of Pace 360

D-Street experts said the main concern for policymakers has been the labour market, which is more likely to drive policy discussions and decisions in the months ahead. They will also have more data to consider leading up to their November and December meetings. Some analysts also noted that a quarter-point cut might provide a temporary boost. Still, it is unlikely to have the sustained impact to counteract the US economy’s multiple challenges.

Ahead of the much-awaited US Fed policy decision, Amit Goel, Co-Founder and Chief Global Strategist at Pace 360, a SEBI registered multi-asset PMS and Cat III AIF, said in an interview with Mint’s Nikita Prasad that the US Fed is likely to deliver a 25 bps rate cut. The policy verdict may also trigger a temporary rally in the Indian market due to improved global risk sentiment. It could also strengthen the Indian rupee and attract foreign investment to India.

“The market’s primary question is how far and fast the Fed will cut rates. We foresee a 25 bps rate cut. A 25-bps cut could trigger a temporary rally in Indian markets due to improved global risk sentiment. It might also strengthen the Indian rupee, making imports cheaper but potentially affecting exports negatively. This could attract foreign investment to India, boosting stock markets. However, the sustained impact will depend on the RBI’s monetary policy response and broader global cues. The long-term effect will hinge on the global economic outlook and future Fed actions,” said Amit Goel of Pace 360.

US Fed Meeting Live: Gold gains as markets gear up for Fed’s interest rate verdict

Gold prices gained on Wednesday, as investors awaited for the Federal Reserve to start its US monetary easing cycle for the first time in over four years. Spot gold rose 0.3 per cent to $2,577.75 per ounce, hovering below a record high of $2,589.59 hit on Monday. US gold futures were up 0.5 per cent to $2,604.30.

Spot silver inched 0.3 per cent lower to $30.63 per ounce after hitting a two-month high on Monday. Platinum eased 0.8 per cent to $973.65. Palladium was down 2.5 per cent to $1,088.00. Traders are pricing in a 63 per cent chance of a 50-basis-point reduction, according to the CME FedWatch tool.

US Fed Meeting Live: Disconnect between equity markets and bond markets

According to Amit Goel, Co-Founder and Chief Global Strategist of PACE 360, SEBI registered multi-asset PMS & Cat III AIF, “There is a huge disconnect playing out between the global equity markets and the global bond markets. While equities are betting on a soft landing, which is why they are at all time highs right now, the bond markets give a much higher probability of a US recession next year. “

This is why the bond markets are discounting 10 FED rate cuts by the same time next year.  While this debate and disconnect may take a few more months to get resolved, there is no doubt that bonds have rallied very smartly in the run-up to the first FED cut. Over the last 30 years, whenever bonds have rallied aggressively in the weeks before the first cut, they have become sideways to bearish in the immediate aftermath. 

Hence, we believe that one should book some profits and reduce the duration in US and in India before the FED meeting on 18th September, so that one can increase the net carry/YTM of the portfolio and then get back to long duration in case there is a correction in bonds or they become sideways for an extended period.

US Fed Meeting Live: Historical insights on market reactions post-rate reduction

The Federal Reserve is expected to kick off a series of rate cuts on Wednesday, after having completed last year the most aggressive rate hike campaign in four decades. For investors, a key question may be whether the Fed will cut rates in time to avert a potential economic slowdown. It is pertinent to note the bonds do much better in rate cutting cycles which lead to a recession than they do in cycles which do not end in a recession. 

This is exactly the reverse from equities which tend to do well post the first rate cut only when it doesn’t turn out to be a recessionary cycle and actually go down post the first cut if it happens to be a recessionary cycle. 

This is also evident from the graphs given below which show how different asset classes react post the first FED cut. In fact, the only asset class that has been very consistent in its reaction to the beginning of the rate cutting cycle is the dollar index which has invariably made a bottom in the immediate aftermath and then gone on to rally hard post that. 

US Fed Meeting Live: AI stocks set to bounce higher as Fed cuts rates for first time in years

With the Federal Reserve expected to cut interest rates today (Wednesday) for the first time in four years, the AI sector – which is experiencing a dip – is primed for a significant rally, predicts the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The bullish prediction from Nigel Green of deVere Group comes as the US central bank’s Federal Open Market Committee is set to announce a rate cut, although analysts are split on whether it be the traditional 25-basis-point rate reduction, or whether the Fed will go for a supersized 50-basis-point cut?

He says: “The AI sector is expected to benefit from the Fed’s shift to monetary easing, opening the door to renewed growth, increased investment, and a surge in innovation.

“Firms developing AI technologies, from machine learning to robotics, rely heavily on capital-intensive research and development (R&D) efforts. “Lower rates will reduce financial constraints on companies focused on AI, enabling them to double down on innovation and scale up their operations.

“This could drive the next wave of breakthroughs in artificial intelligence, positioning the sector for sustainable long-term growth.” Nvidia, a prominent player in the AI sector, serves as a bellwether for the industry’s potential resurgence. Although the company’s stock has dipped in recent months amid macroeconomic uncertainty, its fundamentals remain solid.

Nvidia’s Q2 2024 earnings reflected strong demand for AI-related products, with revenue soaring 88% year-over-year to $13.51 billion. These results highlight the ongoing global appetite for AI technologies, especially those focused on high-performance computing and machine learning.

Nvidia’s recent performance offers a glimpse into the wider AI sector’s strength. AI’s rapid adoption across industries—from autonomous vehicles to financial services—has created immense demand for the hardware, software, and services that support these technologies.

While Nvidia’s trajectory showcases the upside potential, “the entire AI ecosystem stands to benefit from the Fed’s policy shift, including startups, cloud service providers, and enterprises integrating AI solutions,” notes the deVere CEO.

Historically, growth sectors like AI outperform in low-rate environments as companies gain easier access to capital and investors seek high-growth opportunities.

With the Fed signalling a new monetary direction, investor sentiment towards AI companies is likely to improve. Nigel Green continues: “Lower rates make growth stocks more attractive, and AI is one of the most exciting and promising growth sectors out there.

“The innovations happening in AI today will shape the future across nearly every industry, from healthcare and transportation to manufacturing and education. “The Fed’s rate cut gives the sector the breathing room it needs to expand at an even faster pace.”

He goes on to add that now could be an ideal time to buy AI-related stocks, “as they are currently experiencing a dip”, offering investors “a valuable opportunity to enter at lower price points before the sector regains momentum.”

The artificial intelligence sector remains a key driver of technological progress in the global economy, with demand for AI solutions growing at an unprecedented pace. Industries worldwide are leveraging AI to optimize operations, improve decision-making, and drive innovation, making AI a cornerstone of the Fourth Industrial Revolution.

Nigel Green concludes: “With the Fed’s support, the AI revolution is poised to accelerate, delivering long-term value and reshaping industries worldwide.”

US Fed Meeting Live: Latest unemployment rate

In August, the US unemployment rate dropped to 4.2 per cent, slightly down from 4.3 per cent in July. However, it remains significantly higher than the historic low of 3.4 per cent recorded in April 2023. Although the US Federal Reserve has managed to bring inflation closer to its two per cent target, the increasing unemployment rate remains a cause for concern.

The job openings data is closely linked to the unemployment rate. An increase in job openings indicates economic expansion, while a decline suggests a cooling labor market. The latest data reveals that job openings in July dropped to their lowest level since January 2021, during the peak of the COVID-19 pandemic. With the US economy adding only 142,000 jobs in August—well below expectations—economists now believe that the chance of a 50-basis point rate cut has risen.

US Fed Meeting Live: Key metrics of latest US inflation data

The mixed inflation report from the Labor Department followed data last week showing the labor market still cooling in an orderly fashion in August, defying fears of a sharp deterioration, with the unemployment rate retreating from a near three-year high touched in July.

Despite the good news on the headline rate, a measure of inflation that strips out volatile food and energy costs was largely unchanged annually, indicating that the underlying US inflation remains sticky.

The so-called core consumer price index — which excludes food and energy costs — increased 0.3 per cent from July, the most in four months, and 3.2 per cent from a year ago. The core CPI was boosted by a 0.5 per cent rise in shelter, which includes rents and hotel and motel accommodation, after advancing 0.4 per cent in July. Core CPI increased at a 2.1 per cent rate in the last three months.

Economists see the core gauge as a better indicator of underlying inflation and future inflation trends than the overall CPI. Prices increased at a 1.1 per cent annualized rate in the past three months, indicating that a disinflationary trend was now firmly entrenched, allowing policymakers to focus more on the labour market in their quest to sustain the economic expansion.

Food prices edged up 0.1 per cent after climbing 0.2 per cent in each of the past two months. Grocery store food prices were unchanged as increases in the costs of meats, fish, eggs and dairy products were offset by decreases in nonalcoholic beverages, fruits and vegetables. 

Over the past year, grocery prices have ticked up just 0.9 per cent, similar to the pace of pre-pandemic food inflation. The costs of energy products dropped 0.8 per cent after being unchanged in July. Gasoline prices fell 0.6 per cent, while electricity was 0.7 per cent cheaper and natural gas cost 1.9 per cent less. Average gas prices are down 10.6 per cent from a year ago.

The cost of household insurance shot up 0.8 per cent after being unchanged in July. Airline fares rebounded 3.9 per cent after declining 1.6 per cent in July. Motor vehicle insurance also costs more, though the pace of increase slowed from the prior month. The cost of lodgings, including hotel and motel rooms, surged two per cent after rising 0.2 per cent in July. Healthcare costs fell for a second straight month.

Overall, services costs rose 0.3 per cent for the second consecutive month. Services less rent of shelter gained 0.1 per cent after being unchanged for two straight months. Excluding housing and energy, service prices advanced 0.3 per cent, the most since April.

Shelter prices, the largest category within services, climbed 0.5 per cent, the most since the start of the year. That marked the second month of acceleration and defied widespread expectations for a downshift.

Owners’ equivalent rent—a subset of shelter and the biggest individual component of the CPI—rose at a similar pace. It measures the amount homeowners would pay to rent or earn from renting their property.

Goods prices extended their decline, with a 0.1 per cent drop in August. They were pulled lower by a one per cent decrease in used cars and trucks prices as well as moderate declines in the costs of prescription medication and household furnishings. Measured from a year earlier, used car prices have tumbled 10.4 per cent.

US Fed Meeting Live: US inflation hits 43-month low at 2.5% YoY in August

US inflation cooled for the fifth straight month and rose less than expected in August 2024, giving a major boost to Wall Street’s bets on the US Federal Reserve’s definite interest rate cuts of 25 basis points (bps) next week.

Despite the positive round figure, underlying inflation unexpectedly picked up in August due to higher prices for housing and travel, undermining the chances of an outsized US Federal Reserve rate cut in the upcoming policy meeting. Wall Street sharply lowered the probabilities of a broader 50 bps reduction.

The US consumer price index (CPI) slowed to 2.5 per cent in August from a year ago, down from 2.9 per cent in July and the lowest annual figure since February 2021, the Labor Department’s Bureau of Labor Statistics said on September 11.

The annual CPI in August was at a three-year or 43-month low, while CPI increased 0.2 per cent in August, dragged down by lower gasoline prices after rising by a similar margin in July. An interest rate cut by the independent US central bank would boost demand in the world’s largest economy.

US Fed Meeting Live: Did the US Fed wait too long to cut rates? Experts opine

Market analysts said the firmer-than-expected core inflation reading made it more difficult for Jerome Powell to justify a 50 basis point cut in September. The results helped calm market fears of a steeper rate cut as concerns about a hard landing dissipated. Once the Fed begins reducing borrowing costs, the focus will shift to the pace of subsequent easing.

‘’Overall, inflation appears to have been successfully tamed, but housing inflation still refuses to moderate as quickly as hoped, so it hasn’t been completely vanquished. Under those circumstances, we expect the Fed to take a measured approach to cutting interest rates,” said Raj Patel, CMO at MintCFD, a multi-asset trading platform.

‘’A 25 bps rate cut could show muted market results. However, a major rate cut of 50 bps could generate negative reactions since it might show that the Fed signs major concerns about the economic outbreak. The Fed focuses more on employment as the average US unemployment rate up to July, has increased by 0.5 per cent compared to the lowest point in the past year,” added Patel.

While some analysts also noted that a quarter-point cut might provide a temporary boost, it is unlikely to have the sustained impact needed to counteract the US economy’s multiple challenges. They added that the Fed cannot afford to tiptoe around these warning signs with a cautious 25-point cut.

‘’Fed officials have noted that a softening in the labor market could prompt more aggressive rate cuts in the coming months. Yet, a series of weaker-than-expected employment reports has not yet justified rapid cuts. The primary risks for the market in the months ahead include the performance of the broader economy and the jobs sector,” said Alex Volkov, market analyst at VT Markets.

US Fed Meeting Live: US Fed chair Jerome Powell confident on reducing policy rates

Powell has expressed confidence in cutting interest rates for the current meeting, saying that inflation was near the US central bank’s two per cent target. “The time has come for policy to adjust,” Powell said in his keynote speech at the Fed’s annual economic conference in Jackson Hole, Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

His reference to multiple rate cuts was the only hint that a series of reductions is likely, as economists have forecast. After the worst price spike in four decades inflicted pain on millions of households, Powell emphasised that inflation appears largely under control: “My confidence has grown,” he said, “that inflation is on a sustainable path back to two per cent.”

US Fed Meeting Live: When and where to watch US Fed policy meeting?

Fed Chair Jerome Powell is expected to announce the central bank’s first rate cut in more than four years at a press conference later today. The rate announcement will be at 2 pm (EST) on September 18 (12.30 am IST on September 19).
 

When & Where to Watch: Date, Time & Schedule

-FOMC Schedule: September 17 to September 18, 2024

-Date & Timing: 2 pm on September 18 (12.30 am IST on September 19)

-Where to watch: You can watch the announcement live on the Fed’s website or YouTube channel

US Fed Meeting Live: Impact of US Fed rate cut on gold prices 

Hareesh V, Head of Commodities, Geojit Financial Services:

“There are expectations of a 25-50 basis point cut in rates in today’s meeting. The recent economic releases from the US do not suggest a super-sized rate reduction but signs of waning economic activity could push the US central bank to act aggressively to support the economy. 

A cut in rate generally tends to support higher gold prices due to factors like lower opportunity costs, weaker dollar, inflation concerns and a shift in market sentiment. However, actual price behavior may be uncertain and unstable because gold prices are subject to factors far beyond the reach of the US Federal Reserve.

At present, gold prices in the international market are hovering near their lifetime highs due to demand optimism amid surging geopolitical tensions, feeble global growth outlook and hopes of US rate cut.

When there is a decline in interest rates, the opportunity cost of holding non-interest yielding assets like gold decreases. A super-sized rate cut may further weaken the US currency which is already trading near its weakest level this year. 

In addition, since gold is traditionally viewed as a hedge against inflation, investors’ anticipation of rising inflation due to lower rates tends to further lift the investment demand and thus its prices.”

US Fed Meeting Live: D-Street experts bet on size of US Fed interest rate cut

-Arindam Ghosh Co-Founder of Alphaniti Investment Advisors:

“Our expectations is that of a 50 basis cut – with US elections coming up and based on other empirical evidence the possibility of a half percentage rate cut is more likely to address the perception that Fed is perhaps behind the curve. 

With inflation rate likely to further moderate down to 2 percent target rate soon, a jump start to the easing cycle is expected. Though historically the Fed’s move has been rather gradual the current siruation is quite unprecedented . The messaging from Powell of how far and how fast will be key for trying to get a sense how of Fed is looking at data and the economy and global markets will take cue from that.”

US Fed Meeting Live: Powell-led FOMC to unveil sixth policy decision for 2024 on September 18 

The US Federal Reserve is set to announce its new interest rate decision on Wednesday, September 18, after a two-day FOMC meeting. US Fed chair Jerome Powell-led rate-setting panel is widely expected to reduce the benchmark policy rate for the first time in four years.

The estimates were cemented after the latest government data revealed that US inflation cooled for the fifth straight month and rose less than expected in August 2024, giving a major boost to Wall Street’s bets on the US Federal Reserve’s definite interest rate cuts of 25 bps to 50 bps.