Fed Rate: No Meaningful Sustained Impact On Indian Bonds

With no dovish surprise on forward guidance, the 10-year Treasury yield rose to 4.05%

Deepak Agrawal, CIO-DEBT & Head Products, Kotak Mutual Fund

FinTech BizNews Service

Mumbai, October 30, 2025: The Federal Reserve cut its key rate by 25 basis points to 3.75–4.00% in a 10–2 vote, with one member favouring a 50 bps cut and another preferring no change. 

Deepak Agrawal, CIO-DEBT & Head Products, Kotak Mutual Fund, points out: The statement highlighted rising downside risks to employment amid slowing job gains and a modestly higher unemployment rate. With economic activity expanding at a moderate pace and inflation remaining somewhat elevated, the Fed will end balance sheet reduction on December 1—shifting focus toward supporting labour market resilience while remaining vigilant on price stability. The decision aligned closely with market expectations, and with no dovish surprise on forward guidance, the 10-year Treasury yield rose to ~4.05%. We view Governor Miran’s dissent for a 50 bps cut and the early end to quantitative tightening as positive signals for bonds in the near term.
As the Indian bonds did not ease in line with US yields, we do not expect any meaningful sustained impact on Indian bonds.”