The US Federal Reserve has cut interest rates by 25 basis points (0.25%), bringing the federal funds rate down to 3.50%–3.75%. This follows another 0.25% cut on October 29, marking the third straight rate cut. Earlier, the US had reduced rates twice—on September 17 and October 29—lowering them from 4.25% to 4.00%, and then to 3.75%–4.00%. This latest cut was approved by the Federal Open Market Committee (FOMC) with a 9–3 vote.
Last year too, the US had delivered three back-to-back cuts—0.25% in December, 0.50% in November, and 0.25% in September—lifting pressure after years of aggressive rate hikes. Between March 2022 and July 2023, the Fed raised interest rates 11 times to fight inflation.
How the Federal Reserve increased interest rates in the Past
| Meeting Date | Rate change (bps) | Federal funds rate |
|---|---|---|
| 26 July 2023 | ⬆️ 25 | 5.25%–5.50% |
| 3 May 2023 | ⬆️ 25 | 5.00%–5.25% |
| 22 March 2023 | ⬆️ 25 | 4.75%–5.00% |
| 1 February 2023 | ⬆️ 25 | 4.50%–4.75% |
| 14 December 2022 | ⬆️ 50 | 4.25%–4.50% |
| 2 November 2022 | ⬆️ 75 | 3.75%–4.00% |
| 21 September 2022 | ⬆️ 75 | 3.00%–3.25% |
| 27 July 2022 | ⬆️ 75 | 2.25%–2.50% |
| 16 June 2022 | ⬆️ 75 | 1.50%–1.75% |
| 5 May 2022 | ⬆️ 50 | 0.75%–1.00% |
| 17 March 2022 | ⬆️ 25 | 0.25%–0.50% |
What the Rate Cut Means for Markets and India
Market experts say the latest cut is good news for US stock markets, as cheaper loans encourage businesses to invest more. It may also benefit emerging markets like India. When US interest rates fall, foreign investors often put more money into countries with faster growth, meaning higher capital inflows for India.
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