Thu Sep 19 09:09:21 UTC 2024: ## RBI’s Next Move Uncertain as Fed Cuts Rates, Analysts Divided on Impact

**Mumbai, India – ** The US Federal Reserve’s aggressive 50 basis point rate cut has sparked debate among analysts about whether the Reserve Bank of India (RBI) will follow suit. While some expect a rate cut as early as October, others anticipate a delay until December or even 2025.

The cautious stance stems from India’s strong economic growth and the persistent challenge of elevated food inflation. While inflation is easing, it remains a key concern for the RBI.

Emkay Global believes the RBI will likely adopt a wait-and-see approach, prioritizing controlling inflation. The brokerage anticipates the first rate cut by December.

Nomura analysts, however, predict a more significant shift in India’s monetary policy cycle, with a cumulative 100 basis point rate cut by mid-2025. They anticipate a surprise cut this October, followed by further cuts in 2025 triggered by potential growth weakness.

Anand Rathi Shares and Stock Brokers’ Chief Economist, Sujan Hajra, views the Fed’s rate cut as a proactive measure against a possible economic downturn. However, he does not expect the RBI to follow suit due to India’s unique growth and inflation dynamics.

Swapnil Aggarwal, Director of VSRK Capital, acknowledges the Fed’s rate cut’s potential impact on India’s economy but emphasizes the importance of global investor sentiment and the US economy’s trajectory. He suggests a preemptive rate cut of 25-50 basis points before 2025.

SBI Chairman C S Setty offers a contrasting perspective, stating that the RBI is unlikely to cut interest rates in 2024 due to lingering food inflation concerns. He believes the RBI will prioritize long-term inflation trends before making any decisions.

While the Fed’s rate cut is significant, the RBI’s decision remains dependent on a complex interplay of economic indicators and inflation trends, making it a crucial point of focus for the Indian financial landscape.

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