New Delhi, Sept. 8 -- The US Federal Reserve reduced its overnight rate - the rate at which banks can borrow from one another - by one percentage point from September to December 2024. Currently, markets expect further cuts in the coming months.

The Fed's next review meeting is scheduled for 17 September. According to the CME FedWatch Tool, the probability of a 25-basis-points (bps) rate cut that day is 85%. It also predicts two or three 25 bps rate cuts by December 2025, and a 200-bps drop in the Fed funds rate by December 2026.

The reason for these expectations isn't to do with an easing of inflation, but rather a hit to the US economy from President Donald Trump's tariffs.

Fed rate cuts affect your investments in several ways but ar...