US Fed Meeting Live: Dow Jones Up, Nasdaq Down As Traders Bet Another Rate Cut; Dollar Weakens

The US Federal Reserve's monetary policy is among the most important factors in global capital markets. Borrowing costs in the world's largest economy, set by the central bank on a bimonthly basis, have a large bearing on the movement of money (read dollars) in the global financial system.

The Federal Open Market Committee (FOMC), headed by the Fed Chairman, decides on the interest rate. When rates are cut, money typically moves out of safe dollar assets like US Treasury bonds into riskier, high-return bets in emerging markets, including India.

The FOMC is widely expected to deliver its third straight interest rate cut later on Wednesday. The last five instances of US Fed rate cuts show that India's benchmark Nifty 50 index declined three times on the immediate next day, and lost in four of five instances within a week.

To be sure, Indian markets during this period were also influenced by other global as well as domestic factors.

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Ahead of the US Fed's policy verdict, Ross Maxwell, Global Strategy Operations Lead, VT Markets said in interview with NDTV Profit's Nikita Prasad that the upcoming decision is 'harder to predict' than ever before.

The expert believes that the verdict is a 'tricky call' as the 'conflicting' economic data is not enough to guarantee a rate cut. Wall Street has already priced in a rate cut, which makes markets sensitive to any 'policy misstep'. Maxwell also eyes that easing the policy stance may be positive for Indian markets, depending upon other supportive indicators.

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Here's how the US Federal Reserve set the benchmark rates in the last four years.

The Fed began aggressively raising rates from May 2022 to fight rapidly surging inflation after the Covid and Ukraine War shocks to the economy.

Simce September 2024, the FOMC has reduced rates five times to spur economic growth.

The FOMC meeting is scheduled for Dec 9-10. The policy statement will be announced at 2 p.m. ET on December 10 (12:30 a.m. IST on December 11) at a press conference by US Fed Chair Jerome Powell.  

The press conference, which follows the meeting, will be streamed live on the Federal Reserve's social media platforms, such as X and YouTube. 

NDTV Profit will also stream the FOMC press conference on its YouTube channel and social media platforms.

The US dollar index is down 0.14% at 99.08 ahead of the Fed FOMC rate decision. The greenback is down against the pound (-0.2%), euro (-0.1%) and yen (-0.2%).