U.S. Fed Meeting 2026: Fed holds rates steady; Indian markets slip, rupee hits record low

The U.S. Federal Reserve announced its interest rate decision on Wednesday, January 28, following a two-day policy meeting. The Federal Open Market Committee decided to maintain the federal funds rate in the range of 3.5% to 3.75%.
The decision came after the central bank cut rates by 25 basis points in its previous policy meeting. The Federal Reserve said the current policy stance was aimed at balancing inflation control with economic growth considerations.

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Indian equity markets react

Indian equity benchmarks came under pressure on Thursday following the U.S. Federal Reserve’s policy decision. The Sensex slipped around 0.5% in early trade, while the Nifty 50 also declined by nearly 0.5%.
During intraday trading, the Sensex fell to a low of 81,707.94, while the Nifty 50 touched 25,159.8. The decline followed two sessions of gains, during which both indices had risen close to 1%.
Market participants also remained cautious ahead of the Union Budget, which is scheduled to be presented on February 1.

Rupee touches fresh record low

The Indian rupee weakened to a fresh all-time low against the U.S. dollar on Thursday. The domestic currency slipped to ₹91.9850 per dollar, breaching its previous record low of ₹91.9650 recorded earlier this month.
The rupee came under pressure due to sustained foreign portfolio outflows and increased demand for dollar hedging. So far this year, the currency has declined by around 2% and has fallen nearly 5% since the announcement of higher U.S. tariffs on Indian merchandise exports.

Bond and currency market cues

U.S. Treasury yields remained largely steady following the Federal Reserve’s decision, while the U.S. dollar traded firm against major global currencies. The Fed reiterated that future policy decisions would remain data-dependent, with inflation and labour market conditions continuing to be key factors.

Broader economic context

The Federal Reserve noted that inflation in the United States remains above its long-term target, while labour market conditions have shown signs of stabilisation. Economic activity has continued to expand at a moderate pace, supported by consumer spending and business investment.
In India, investor focus has shifted towards the upcoming Union Budget, with market participants closely tracking fiscal deficit targets and borrowing plans for the next financial year.