RBI Governor Shaktikanta Das
The Federal Reserve has started cutting interest rates. The Federal Reserve cut interest rates on Wednesday after four years. The US central bank has cut interest rates by 50 basis points. Now the most important question is whether the central bank of India will cut in October or December. At the same time, there are still two meetings of the US Federal Reserve. In which the head of the Federal Reserve indicated that he is confident of cutting the rate by 0.50 basis points by the end of the year and by one percent in the year 2025. On the other hand, the RBI is considering not cutting interest rates until March 2025. We also tell you what the chairman of the SBI, the largest lender in the country, CS Setty, has said.
What did the OSE predict?
State Bank of India (SBI) Chairman CS Setty has said that in view of the uncertainty over food inflation, the Reserve Bank is unlikely to relax the benchmark policy rate during 2024. The SBI chief said that on the interest rate front, many central banks are taking independent decisions. While the interest rate cut by the Federal Reserve will affect everyone, the RBI will keep food inflation in mind before taking a decision on an interest rate cut. He said that we believe that the interest rate cannot be reduced during the current calendar year, we may have to wait till the fourth quarter of the financial year, till we see an improvement in food inflation.
Inflation below 4 percent for two consecutive months
The Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, is scheduled to meet from October 7 to 9 and take a decision on the interest rate. If we talk about retail inflation at present, it stands at 3.65 per cent. Whereas in July the same figure stood at 3.54 per cent. This means that the inflation rate has been below 4 per cent for two consecutive months. What is special is that the average target of the RBI is below 4 per cent. Amid the risk of high food inflation, the RBI has not made any changes in the interest rates in the August MPC.
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No changes since February 2023
What is special is that RBI MPC has not made any changes in interest rates since February 2023. The repo rate has remained at 6.5 per cent. This was the ninth consecutive MPC meeting where no change in interest rates was seen. In the last meeting, four out of six MPC members voted in favour of the status quo while two outside members advocated a rate cut. Earlier this week, Reserve Bank Governor Das had also said that the decision to cut interest rates would be based on long-term inflation and not monthly data.
Europe has cut it twice
On the other hand, the European Central Bank has also cut interest rates twice. For the first time, a cut of 0.25 percent was made in June. Recently, the European Central Bank made another cut of 0.25 percent. This means that the European Central Bank has reduced interest rates by 0.50 percent. What the Federal Reserve did in one fell swoop. The British Central Bank could also cut interest rates in the coming days. Its effect can also be seen in other countries around the world.
