BS Number Wise: Working in tandem on monetary policy

Central banks of the world are implementing coordinated rate reduction but such convergence is neither new nor permanent

In July 2019, as the US Federal Reserve cut the Federal Funds Rate, the Reserve Bank of India responded with a repo rate cut. The trend continued in October and December 2019, with the two central banks reducing policy rates in tandem. Between March 2020 and May 2020, central banks of all major economies reduced policy rates to battle the economic slowdown caused by the coronavirus pandemic.

After nearly a year and a half of low policy rates, the US Fed in December 2021 accelerated its cycle, announcing multiple hikes in 2022. The Bank of England went a step ahead