The global economy is facing a major turning point today. In a double-impact news event, the US Federal Reserve (the American central bank) has decided to keep interest rates unchanged, while US President Donald Trump has officially nominated Kevin Warsh to be the next Fed Chair.
These two events—Jerome Powell holding rates and Trump naming his replacement—are creating ripples across global markets, including India. If you are an investor, a home loan borrower, or just follow the news, here is everything you need to know in simple English.
What Just Happened?
On Wednesday, current Fed Chair Jerome Powell announced that the US Federal Reserve will keep its key interest rate steady at 3.50% to 3.75%.
Powell explained that the US economy is still very strong and growing at a healthy pace. However, because inflation (price rise) is still “somewhat elevated,” the Fed does not want to cut rates quickly just yet. They want to be sure that prices are stable before making loans cheaper.
The Big Twist: Trump Nominates Kevin Warsh
While Powell was announcing the rate decision, political drama was unfolding in the background. President Donald Trump, who has frequently criticized Powell (even calling him a “jerk” in a recent speech), has announced his choice for the next Fed Chief.
Trump has nominated Kevin Warsh, a former Fed Governor, to replace Jerome Powell when his term ends in May 2026. This is a huge move because investors have been waiting to see who Trump would pick. Trump believes Warsh will do a “good job” and has often argued that US interest rates are too high.
Read more: Scott Bessent & India
Why Does This Matter to India?
When the US Federal Reserve makes a move, the Reserve Bank of India (RBI) and Indian markets often feel the heat. Here is how this news impacts India:
1. Stock Market Volatility
Indian markets (Sensex and Nifty) have been reacting cautiously. Investors dislike uncertainty. With a new Fed Chair coming soon and rates staying high for now, foreign investors might wait before pumping more money into Indian stocks. You might see some ups and downs in the market over the next few weeks.
2. No Quick EMI Relief
Many Indians are hoping for home loan and car loan interest rates to go down. However, the RBI often looks at global trends. Since the US Fed has not cut rates, the RBI might also decide to wait longer before cutting repo rates in India. This means your EMIs might not go down immediately.
3. Gold and Silver Prices
Because there is tension between the Trump administration and the Fed, many investors are playing it safe by buying gold. Gold prices have surged near $5,600 per ounce, and silver is also rising. In India, this means gold jewellery and coins will get more expensive.
4. IT Sector Impact
Indian IT companies (like TCS, Infosys, Wipro) depend heavily on US clients. If US interest rates stay high, American companies might spend less on new tech projects, which could slow down growth for Indian IT firms.
Who is Kevin Warsh?
Kevin Warsh is not new to this game. He served as a Fed Governor from 2006 to 2011 and was the youngest Governor in Fed history at that time. He is known to be market-friendly.
President Trump prefers him because Warsh has criticized the Fed in the past for being too slow to react. The market now expects that once Warsh takes over in May, he might push for faster rate cuts to boost the US economy, which Trump strongly wants.
What Happens Next?
- Jerome Powell will finish his term until May 2026. He has firmly said he will not resign early despite political pressure.
- The Transition: The market will watch how Powell and Warsh interact during this transition period.
- RBI’s Move: All eyes are now on the Reserve Bank of India’s next meeting to see if they decouple from the US trend or stay on pause.
Frequently Asked Questions (FAQs)
Q1: Will home loan rates in India go down after this news?
Likely not immediately. Since the US Fed did not cut rates, the RBI might also keep Indian rates steady for a while longer. We may have to wait a few more months for a rate cut.
Q2: Why is Donald Trump angry with Jerome Powell?
Trump believes that Powell has kept interest rates too high for too long, which hurts businesses and borrowing. He wants rates to be cut fast to help the US economy grow bigger.
Q3: Is it a good time to buy gold?
Gold prices are currently very high because of global uncertainty. While gold is a safe investment, it is expensive right now. Experts suggest buying in small amounts or waiting for a dip.
Q4: Who is Kevin Warsh?
Kevin Warsh is Donald Trump’s nominee for the next Fed Chair. He is a former banker and served at the Federal Reserve before. He is expected to take over in May 2026.