New Delhi, Dec 11: Amidst moderately paced economic activity, unemployment increasing, elevated inflation level and uncertain economic outlook, the Federal Open Market Committee (FOMC) has decided to lower the target range for the federal funds rate by 0.25 percentage point from 3.75%-4% to 3.5-3.75%, said Mr Rajeev Juneja, President, PHDCCI, in a press statement issued here today.
This announcement was coupled with expansionary monetary policy measures of lowering the interest rate paid on reserve balances to 3.65% (effective December 11, 2025), undertaking open market operations as necessary to maintain the federal funds rate in target range, conducting standing overnight repurchase agreement operations at a rate of 3.75%, standing overnight reverse repurchase agreement at 3.5% and with a per-counterparty limit of $160 billion per day, among others, to ease liquidity conditions, and lower the cost of short-term funding.
This move will reduce borrowing costs for firms and households, boost investment and consumption, and thereby stimulate economic activity, he said.
“Further, the Committee will initiate purchases of shorter-term Treasury securities if needed. This will lead to expansion of US Federal Reserve’s (US FED) holdings of short-term Treasuries to maintain an “ample level of reserves on an ongoing basis”, added Mr Juneja.
“Looking ahead, we anticipate that the U.S. FED will continue to carefully monitor the evolving macroeconomic landscape and adjust its monetary stance as dictated by data. We view this measure as supportive of global financial conditions, with positive implications for emerging markets, including India,” said Dr Ranjeet Mehta, CEO & Secretary General, PHDCCI.
