Current Affairs - International - Discussion

The US Federal Reserve reduced its benchmark interest rate by 25 basis points (bps), bringing the range to 4.00%–4.25%. This marks the first rate cut of 2025 and signals the beginning of a potential easing cycle. The decision was influenced by signs of a cooling labour market, slower economic growth, and moderating inflation that remains above the 2% target. The Fed’s move aims to lower borrowing costs, encourage business investment, and support consumer spending, while still balancing the risks of inflation. Globally, the cut is expected to shape monetary policy sentiment, impacting capital flows, debt markets, and investor strategies across emerging and developed economies.