Mixed Reactions to US Federal Reserve's Half-Point Rate Cut

The US Federal Reserve's recent half-point rate cut has sparked diverse opinions among experts. While some anticipate increased investment and strong inflows into emerging markets, others foresee reduced equity returns and higher gold prices. The Reserve Bank of India remains cautious about immediate rate cuts despite potential foreign investments.

The US Federal Reserve's decision to slash the benchmark rate by half a point has polarized experts, with divided opinions on its economic impacts.

While cheaper financing could drive investment flows, some fear lower returns on equity and rising gold prices. The rate cut reduces the target range of federal funds to 4.75-5 percent, a bolder move than many analysts predicted.

PHDCCI President Sanjeev Agrawal and Colin Shah from Kama Jewellery highlight potential bullishness in gold prices as investors seek safe-haven assets. Experts also suggest subsequent rate cuts in emerging markets could follow, boosting foreign investment and strengthening currencies like the Indian rupee. However, the Reserve Bank of India remains cautious, keeping its repo rate steady at 6.50 percent to control inflation.

(With inputs from agencies.)