US Fed, RBI gear up for their last policy meet of the year; will a pause continue? When to expect rate cuts?
RBI) Monetary Policy Committee (MPC) is scheduled to commence its three-day policy meeting on December 6, with the outcome due on December 8. Similarly, the US Federal Reserve is set to announce its policy outcome on December 13. Both the US Fed and the RBI are expected to maintain interest rates at the current level since inflation is easing and growth remains resilient.
“The focus of the policy will remain on ensuring the disinflation process and aligning inflation with the 4 per cent target. Headline (consumer price index) inflation is expected to remain above 5 per cent till Q1FY25, which is above the 4 per cent target," Mint earlier quoted Gaura Sengupta, India economist at IDFC First Bank, saying so. Both the central banks want to see a sustainable drop in inflation.
While the RBI's target for inflation is 4 per cent, the US Fed wants it at 2 per cent. Most economists expect the RBI MPC to cut rates only in the second half of the next financial year, depending on the stance taken by the US Federal Reserve. Also Read: India Q2 GDP: Indian economy poised for strong growth in FY24? Here's what top economists say Experts underscore that the recent statements from Federal Reserve officials indicate that the US central bank is currently not considering raising interest rates.
Despite this stance, the ongoing battle against inflation remains the Fed's priority, and it would be premature to anticipate a rate cut at this juncture. Also Read: RBI to maintain status quo on policy, raise GDP forecast: Mint poll V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services pointed out that the RBI MPC will be meeting this week under very favourable conditions. CPI inflation has come down from 5.02 per cent in
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