Monetary policy: RBI faces Hobson's choice on policy rate cut decision

This policy comes at a time when growth is slowing, inflation is still pretty high, and the rupee has started losing value against the dollar

In the first week of November, the US Federal Reserve cut its benchmark interest rate by 25 basis points to 4.5-4.75 per cent, its lowest level since March 2023. In a unanimous vote, the Fed's policy committee went for a second successive cut in the current cycle. One basis point is a hundredth of a percentage point.

 

Fed’s two rate cuts so far this year have reduced the federal funds rate by a combined 75 basis points.

 

Analysts say that the larger impact will be felt if the Fed continues to cut rates in its December meeting and into 2025.