• Indian Rupee edges lower on the firmer US Dollar ahead of a key US event.
• The Federal Reserve is widely expected to keep the benchmark overnight rate steady in the 5.25%–5.50% range.
• Investors await the FOMC interest rate decision and press conference ahead of the Indian Interim Budget 2024. 

Indian Rupee (INR) trades on a softer note on Wednesday. The recovery of the pair is bolstered by safe-haven flow as traders prefer to wait on the sidelines ahead of the Federal Reserve's Open Market Committee's (FOMC) interest rate decision.

India has attracted attention with its standout growth trajectory. Indian Chief Economic Adviser, V Anantha Nageswaran, stated that India can aspire to become a $7 trillion economy by 2030. However, the risk of sticky inflation and higher oil prices amid the Middle East geopolitical tension might impact the Indian economy.  

The Federal Reserve is widely anticipated to leave benchmark interest rates unchanged at a 23-year high of 5.25–5.5% at its January meeting. The prospects that the first Fed rate cut will happen at the March meeting have faded as the economy continues to show surprising strength. According to the CME FedWatch Tool, the markets have priced in 85% odds of a rate cut at the May meeting. 

Later on Wednesday, FOMC is set to announce its rate decision at 19.00 GMT and Chairman Jerome Powell will hold a press conference at 19.30 GMT. Powell’s speech could provide information on the central bank's outlook and offer some hints about the timeline of rate cuts in 2024. Apart from this, India’s S&P Global Manufacturing PMI for January will be due on Thursday. All eyes will be on the Indian Interim Budget 2024 for fiscal year 2024–25.