Joe Biden and Kamala Harris. (file photo)
First India, now the US has got a big relief on the inflation front. Where two days ago, retail inflation in India had hit its lowest level in 5 years. At the same time, retail inflation in the US fell in July to 2.9 percent, the lowest level in more than three years. This news can be considered good news not only for the US but for the entire world. The important reason for this is that due to low inflation in the US, the possibility of the US Federal Reserve cutting the policy rate in September has further increased. If US interest rates are cut in September, then other central banks in the world will be able to cut interest rates.
Inflation is falling in the United States
Releasing the retail inflation data on Wednesday, the US Department of Labor said that consumer prices rose by only 0.2 percent in July compared to June. Compared to a year ago, prices rose by 2.9 percent in July, while the inflation rate in June was three percent. This is the lowest annual increase in retail inflation in the US economy since March 2021. This news is considered very good for the United States and the entire world. Recently, India’s inflation rate had come down to 3.54 percent. Which was at the lowest level in 5 years.
The possibility of an interest rate cut increases
This weakening of US inflation has raised expectations of a cut in the monetary policy rate. The Federal Reserve could take a decision on interest rates in September. Federal Reserve Chairman Jerome Powell himself had also indicated this. According to experts, due to the reduction in inflation, the Federal Reserve could reduce interest rates by 0.25 to 0.35 percent at its meeting in mid-September. After which the deduction can be made by the rest of the central banks of the world. However, for the ninth consecutive time there has been no change in interest rates at the RBI’s MPC held in August.
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