- The US Federal Reserve kept interest rates steady at 3.50%-3.75% as expected by analysts
- The Fed cited Middle East conflict and oil prices above $110 a barrel as key uncertainties
- Policymakers raised the 2026 inflation forecast to 2.7% with a possible rate cut later this year
The US Federal Reserve has decided to keep interest rates unchanged amid soaring oil prices and global uncertainty. The Federal Open Market Committee kept its benchmark rate unchanged at 3.50%-3.75%, which was widely anticipated by Wall Street analysts.
The US central bank cited uncertainty emanating from the conflict in the Middle East, which has pushed crude above $110 a barrel. Policymakers revised their 2026 inflation forecast higher to 2.7%, with Fed Chair Jerome Powell maintaining a cautious tone, though he left room for one rate cut later this year.
What's In Store For Indian Markets?
US Fed's decision to keep rates unchanged is largely expected to have a neutral to short-term impact on Indian equity markets, perhaps even more so considering that the currency and bond markets are closed on Thursday in the wake of festivities across India.
An early indicator is usually the GIFT Nifty, which is, in fact, trading higher with gains of around 0.36% early morning. GIFT Nifty trading in the green suggests the markets could be set for a positive open on Thursday.
G Chokkalingam, founder of Equinomics Research, says the US Fed decision is not a concern for Indian markets, which should be more worried about the situation in Iran and its implications on the global oil market.
"Maintaining the rate by the US Fed is not a concern for the Indian markets. First of all, it was an expected move as the ongoing Iran war is inflationary in nature for the US.
"Secondly, the ongoing war is more critical for the Indian economy and markets as its impact is huge as compared to what a 25 bps rate change can make in the short term. If any compromise is found for the war, the domestic market can flare up irrespective of the US Fed policy in the short term," he said.
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