Global markets are eyeing the U.S. Federal Reserve’s two-day policy meeting, which concludes on September 17, 2025. The consensus expectation is for a 25 basis point rate cut, though a larger 50 bps move cannot be fully ruled out.
The outcome and, more importantly, the Fed’s forward guidance on inflation and future rate cuts will set the tone for asset classes worldwide.
Gold Outlook:
Gold prices, already trading near record highs, could gain further if the Fed delivers a rate cut with dovish commentary. Lower U.S. yields and a weaker dollar typically make the non-yielding asset more attractive. However, a cautious Fed stance could lead to consolidation or profit-taking in the short term.
Impact on Indian Stock Market:
For Indian equities, the Fed decision will primarily affect foreign investor flows, currency stability, and borrowing costs.
-
A 25 bps cut, largely priced in, may trigger a mild rally, with rate-sensitive and export-oriented sectors such as banking, IT, and consumer discretionary benefiting.
-
A larger 50 bps cut could ignite a broader rally, especially in midcaps, industrials, and real estate.
-
Conversely, a pause or hawkish guidance could disappoint markets, leading to FII outflows and potential correction in indices.
The Rupee Factor:
The movement of the Indian rupee against the dollar will play a critical role. A stronger rupee would ease imported inflation pressures, while a weaker one could benefit exporters but weigh on import-heavy sectors.
Bottom Line:
The Fed’s decision will influence both safe-haven demand for gold and risk appetite in equities. Investors should watch not only the rate cut itself but also the Fed’s signal on how aggressively it intends to ease policy in the months ahead.