The recent US Federal Reserve's decision to slash interest rates by 50 basis points has sparked out various discussions about its potential impact of it on global markets.

During the Deloitte Government Summit 2024, Chief Economic Advisor V Anantha Nageswaran noted that the rate cut will have a 'relatively muted impact' on India.

While the move might benefit emerging economies, India’s stock markets are already attracting substantial interest from both domestic and foreign investors, he emphasised.

He also added that it would also be premature to expect the US Fed rate cut ti drive a significant recovery for the global economy.

"There are too many moving parts," he added, pointing to geopolitical conflicts and the upcoming US election as key factors contributing to uncertainty.

India’s Investment Scene

Nageswaran also highlighted on the private investment in the country. He noted that India's gross fixed capital formation has reached 30.8 per cent in FY24, driven by both public and private sectors.

He also referenced about the recent data from the Reserve Bank of India (RBI). The rise in corporate fund mobilisation for capital investments, reaching a 12-year high as per RBI data from August, further points the positive momentum in India's growth potential.

Capital Expenditure in Focus

In addition to private investment, he also pointed out about the government’s push for capital expenditure.

He added that Rs 11.11 trillion, or 3.4 per cent of GDP, has been allocated for infrastructure development in FY25 to drive economic growth. This huge investment is part of the government’s broader strategy to boost the economy by improving the country's infrastructure.

US Federal Reserve Slashes Interest Rates

The US Federal Reserve broke its recent trend of holding interest rates steady for eight consecutive meetings by cutting rates sharply by 50 basis points in its latest review.

"The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate," Fed said in its statement.

"In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks," it added.