US Stocks: US Fed to cut rates in June, economists say, despite war inflation risks

Lower US interest rates typically lead to a weaker dollar and increased foreign institutional investment (FII) into emerging markets like India. This could benefit export-oriented sectors like IT and reduce borrowing costs for Indian companies.

• •US Federal Reserve expected to cut interest rates for the first time this year in June.
• •Economists polled by Reuters maintain this view despite risks of inflation from energy market disruption due to geopolitical conflicts.
• •The U.S.-Israeli war on Iran is cited as a potential source of energy market disruption.
• •Risk flag: Geopolitical escalation leading to higher crude oil prices could negate the positive impact of rate cuts.
• •Risk flag: Unexpected hawkish stance from the Fed due to persistent inflation.