The fall in the stock markets has increased the pressure on the Federal Reserve to cut interest rates

Mumbai: The fall in stock markets across the world on Monday has put pressure on the US Federal Reserve to cut interest rates in the mid-term. Analysts are now demanding the Federal Reserve to cut interest rates before the September meeting.

The Federal Open Market Committee (FOMC) kept interest rates on hold at its late July meeting but also hinted at a rate cut at its September meeting.

Stock markets around the world fell on Monday amid signs of a US recession, a sudden interest rate hike by Japan and fears of an Iran-Israel war, prompting the Federal Reserve to immediately cut interest rates by half a percentage point before September.

Inflation in the US is falling and employment data is also weak, which can be considered favourable for a cut in interest rates.

In an interview to a TV channel, an American economist said that it is necessary for the Federal Reserve to immediately cut the interest rate by a quarter percent.

Another analyst said it was too early to predict a recession in the US based on a weak jobs report.

An economist at Pantheon Macronomics said in a note to clients that the Federal Reserve believes the stock market debacle will be undervalued, as US benchmark indices are still significantly elevated compared to the beginning of the year.

The interest rate in America is currently between 5.25 and 5.50 percent, but after the Federal Reserve meeting last month, it was indicated that the board is preparing to cut the rate in the meeting to be held in September. Earlier, there was a possibility of cutting interest rates before the elections to be held in America in November.