Archive · 16 Dec 2025
US Fed Cuts Rates, Restarts Treasury Purchases
The US Federal Reserve recently cut interest rates and started buying US treasuries.
They call this 'reserve management,' but some people think it's a type of 'quantitative easing' (QE).
The Fed says they're doing this to keep interest rates stable, especially after seeing signs of liquidity tightening.
This is similar to a situation in 2019 when there was a sudden shortage of money in the financial system.
Some thought this would help Indian markets, but so far, foreign investors are still selling.
Also, US bond yields are rising, which might make Indian markets less attractive.
US Federal Reserve cut interest rates and announced treasury purchases, calling it 'reserve management'.
Critics argue the move is a form of quantitative easing (QE).
The Fed aims to maintain the Fed Funds rate within its target range to prevent liquidity tightening.
Similar to the 2019 repo market crisis, the move is to ensure ample reserves.
Indian markets have seen continued foreign investment selling post the Fed's decision.
- Who
- US Federal Reserve
- What
- Cut interest rates and announced treasury purchases
- When
- Last week (December 2025)
- Where
- United States
- Why
- To ensure Fed Funds rate remains within target range and prevent liquidity tightening
- Action
- Rate cut and treasury purchases
- Fed's Term
- Reserve management
- Critics' Term
- Quantitative easing
- Purpose
- Maintain Fed Funds rate within target range
- Previous Incident
- September 2019 repo market crisis
- Impact on Indian Markets
- Continued FII selling
- US 10-year Yield
- Around 4.15%