Washington, D.C., : The US Federal Reserve issued its third straight interest rate cut on Friday, reducing the benchmark federal funds rate by 0.25% to 4.25–4.50%. The move aims to support slowing economic growth as job markets weaken and inflation remains stuck at 3.2%, well above the Fed’s 2% target.
Fed Chair Jerome Powell said the cuts are intended to stabilize economic momentum disrupted by global trade frictions, but cautioned that future rate reductions will be “limited.” He warned that persistent consumer prices and continued wage pressures make aggressive easing unlikely in the near term.
The policy decision set off mixed global market reactions. Asian markets climbed 1.5%, buoyed by hopes of smoother liquidity, even as US tech sentiment weakened. Oracle shares sank 8% after the company issued disappointing AI-driven revenue forecasts, renewing concerns about a potential “AI bubble.”
Emerging markets felt the immediate impact as well. The Indian rupee plunged to a record low of ₹90.30 per US dollar, hurt by both the Fed’s cautious tone and Mexico’s new $500 million annual tariffs on Indian textile imports. Analysts say the dual shock may pressure India’s export-led sectors despite its projected 7% GDP growth for 2025.
Luxury metals surged as investors sought safe-haven assets, with silver prices hitting an all-time high of $35 per ounce. Meanwhile, unemployment claims in the US jumped 12% last week, signaling further cooling in the labor market.
Economist Paul Krugman warned that if government subsidies weaken during this slowdown, inequality could widen, particularly across emerging economies heavily dependent on trade flows.
The Fed has now cut rates by 0.75% in 2025, marking a cautious but noticeable shift toward supporting growth while maintaining vigilance on inflation risks.
