RBI Interest Rate Update: Interest rates may come down! Interest rate cut in America, know the details…

RBI Interest Rate Update: The US Federal Reserve has cut interest rates on September 18 after four years. The cut of 50 basis points (0.5%) is much more than the expectations of experts. Now interest rates will remain between 4.75% and 5.25%. America is the world's largest economy, so every major decision of its central bank affects economies around the world.

Effect of reduction: Interest rates may come down in India too, loans will become cheaper

After the reduction in interest rates in the US, the Reserve Bank of India may also cut rates. This reduction may put pressure on the banking sector. Due to the fall in interest rates, bank deposits become less attractive to customers. This will affect banking profitability in the medium term. However, the real estate sector may benefit from lower loan rates.

Due to the reduction in rates, the difference in interest rates between the US and other countries has increased. This will increase currency carry trade (taking a loan at low interest rate and investing it in a high interest market and earning money from it) in countries like India. In such a situation, the lower the interest rate in the US, the greater the opportunity for arbitrage. Arbitrage opportunity is a situation in which people make money by taking advantage of the difference in prices in the markets.

Low interest rates in the US can boost foreign investment in India, which will strengthen the currency and equity markets. Its effect has also been seen on the US and Indian markets. On September 19, the Dow Jones of the US market closed at 42,025 with a gain of 1.26%. Today, on September 20, the Sensex made a high of 84,694 and the Nifty of 25,849.

Rate cuts often lead to a devaluation of the US dollar, which impacts global trade balances and exchange rates. A weak dollar can increase the prices of commodities such as oil and gold, as these are usually priced in dollars. Gold rose by ₹220 to ₹73,202 in India today. Silver is selling at ₹88,612 per kg.