The Morning Brief Fed’s Latest: Rate Cut Rally or Dead Cat Bounce?
Sep 19, 2025
Nishanth Vasudevan, Markets Editor at The Economic Times, shares his insights on the recent Fed rate cut and its implications. He discusses Jerome Powell's cautious stance amidst sticky inflation and job market risks. The conversation delves into global market reactions and specifically focuses on the implications for India. Nishanth advises investors on balancing their portfolios, suggesting a mix of equities, gold, and bonds as uncertainties loom. Will foreign flows revive, or are record highs for Sensex and Nifty a distant dream?
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Fed's First Cut And Conditional Path
- The Fed cut rates by 25 bps and projected two more cuts conditional on data.
- Powell emphasized this is a risk-management move, not a guarantee of further easing.
Risk Management Tone Tempered Market Cheer
- Powell framed the cut as 'risk management' while warning about sticky inflation and slowing growth.
- Markets reacted mixedly with bond yields rising and only modest equity gains.
Weaker Dollar Doesn't Guarantee Flows
- A weaker dollar and lower US rates usually send flows to emerging markets like India.
- Nishanth warns that this cycle may not automatically restore foreign inflows into India.