US Fed Rate Cut: What it Means for the Indian Economy?
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The US Federal Reserve cut its benchmark interest rate by 50 basis points on 18 September 2024, marking the first rate cut in over four years. The Reserve Bank of India (RBI) has stated there will be no rate cuts in India in 2024 due to inflation around 5%. Economic Affairs Secretary Ajay Seth indicated that the US rate cut won't significantly impact investment inflows to India. Economists, however, expect increased capital inflows into India, benefiting the debt market and potentially lowering domestic bond yields below 6.8%. Dr. Manoranjan Sharma noted that the Fed's decision could enhance global liquidity, positively affecting Indian equities. The RBI may consider a shallow rate cut cycle of 50bps by March 2025, depending on food inflation trends, with expectations of maintaining the current policy in October 2024 and possibly cutting rates in December 2024.

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