The US central bank Federal Reserve (US Fed) has recently announced a cut in interest rates by 0.25%. Now US interest rates are between 4.5% and 4.75%. This decision has been taken to boost the US economy and control inflation. This can also affect the Indian markets, because when America reduces interest rates, the expectation of reduction in interest rates in other countries also increases.

impact of reduction in interest rates

The biggest impact of the reduction in interest rates by the Federal Reserve will be on loans. When interest rates fall, banks and financial companies can offer cheaper loans. This will directly benefit those who want to take a loan for home, car or other needs. Apart from this, companies which have heavy debt will also get relief from this decision, because their loan will become cheaper and they will be able to repay it quickly.

Impact on IT, Pharma and Banking companies

According to experts, the IT and pharma sectors will benefit the most from the reduction in interest rates. Apart from this, banking and financial companies will also benefit from this, because cheap loans will increase the loan demand of these companies. These companies will be able to borrow more money and it will help in their growth. If RBI also cuts interest rates, then Indian companies can also benefit from it.

Powell's statement of not resigning

Meanwhile, Federal Reserve Chairman Jerome Powell has said that if President Donald Trump asks him to resign, he will not leave the post. Trump has targeted Powell several times, but Powell has clearly said that his tenure will last till 2026 and it is not legally possible to dismiss him.

Confrontation between Trump and Powell

Let us also tell you that Trump appointed Powell as the chairman of the Federal Reserve during his tenure, but over time the differences between them increased. Trump had accused Powell several times of increasing inflation, but Powell says that his aim is to keep the US economy stable and not to succumb to political pressure.

The reduction in interest rates by the US can affect the global economic environment. Indian markets can also react to this, especially in those sectors which are dependent on loans. Also, Powell's statement of not resigning shows that the Federal Reserve will work with its independent policy, without any political pressure.