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How the Next US Fed Policy Meeting Will Affect Your Investments in India?

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November 21, 2023


What’s Inside

As unlikely as it may sound, the decisions and actions of the United States Federal Reserve (US Fed), particularly regarding interest rates, have a significant impact on global markets, especially in emerging economies like India. 

For instance, in one of the 2022 Fed Meetings, it was announced that the interest rates would be hiked up for the next quarter. Right after this announcement, both the Nifty and Sensex opened up with lowered numbers for a period of three consecutive days. This led to a sharp correction in the Indian equity market and resulted in a portfolio movement for many investors.

Join Jasna Jayan, a Research Analyst at Fi, as she delves into the basics of US Fed meetings, their typical agenda, and how interest rate announcements in the December meeting may shape the Indian economy and stock market. 

What is the US Fed Meeting? 

The Federal Open Market Committee (FOMC) meets eight times annually. 

During these sessions: 

  • the committee evaluates economic and financial conditions
  • establishes a suitable approach to monetary policy
  • evaluates the potential risks to its long-term objectives of achieving price stability
  • craft sustainable economic growth policies for the US 

Read this article to learn more about the US Fed here

When is the Next US Fed Meeting Taking Place?

The upcoming Federal Open Market Committee (FOMC) meeting is being held on December 12th-13th, 2023. 

What Happened in the Previous US Fed Meeting?

In the last Fed meeting that was held on 1st November 2023, the Fed maintained the status quo. It signalled that it could continue to raise rates at least one more time this year to bring down the overall inflation. 

The Relationship Between Fed Meetings and Inflation 

The Fed influences inflation by adjusting interest rates during its meetings. Raising rates can cool off the economy and reduce inflation while lowering rates can stimulate economic activity and boost inflation. The Fed's statements and guidance during these meetings also shape expectations, influencing market behaviour and economic decisions. 

Between the last meeting in November and now, the US inflation data has come in at 3.2% - this is a game changer for the markets and is lower than what was expected. More importantly, core inflation increased only 0.2% on a month-on-month basis, which is also a positive sign. 

What are the Experts Projecting for the Upcoming Meeting?

The upcoming Fed meeting in December ‘23 is anticipated to be crucial and would mark an important day that several economists, investors and policymakers in India and the world are looking forward to. 

Since the US Federal Reserve's primary concern was rising inflation, a decline in inflation will result in lower interest rates. While many experts are expecting the Fed to maintain its current interest rate target of 5.25%-5.50%, it is impossible to predict exactly what the US Fed will decide. 

How Will the Fed Meeting Affect the Indian Stock Market?

To understand how the Fed meeting will affect the Indian stock market, it is crucial to understand their interconnected relationship. India's growing economy is closely linked to the world markets. 

If the trend of lower inflation clubbed with the potential drop in US interest rates continues, the Reserve Bank of India (RBI) may be compelled to consider softening interest rates in India, too, with investors' changing notions of where they're putting their money. Along with this, the overall macroeconomic conditions in India are currently favourable, given the following: 

  • low inflation
  • strong GDP numbers
  • possibility of increased government spending ahead of the 2024 national elections 

Why Should You Care? 

There is a chain reaction to the Fed's movement on interest rates in India. This,

  • strongly influences the foreign capital inflow in India when foreign investors pull money away 
  • this leads to the fall of the equity market 
  • in turn, affecting currency depreciation (as higher rates give a boost to the dollar index) 

For instance, in one of the 2022 Fed Meeting, when it was announced that the interest rates would be hiked up, both the Nifty and Sensex opened up with lowered numbers through a period of three consecutive days.  

On the other hand, if the Fed takes a pause and signals that it is preparing for rate cuts in the subsequent policy meetings, the Indian market may see strong gains. 

Explore US Stocks on Fi

If you’d like to diversify your investment portfolio and have an appetite for stocks beyond borders, you may be pleasantly surprised to know that US stock investing can be done from India from the comfort of your home. 

Fi enables you to invest in top US companies — at industry-best Forex rates and zero withdrawal charges! So you can own shares in some of the biggest global brands! Besides in-app explainers, new investors can use Curated Collections to make decisions. Seasoned investors can dive deeper, apply filters & pick from a wide range of international options.


Investment and securities are subject to market risks. Please read all the related documents carefully before investing. The contents of this article are for informational purposes only, and not to be taken as a recommendation to buy or sell securities, mutual funds, or any other financial products.
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