RBI monetary policy review: Wait for rate cut, change in stance gets longer

The combination of strong growth and above-target inflation does not make a case for a rate cut and even a shift in the policy stance too soon

Less than 24 hours before the Reserve Bank of India’s second monetary policy in FY25, the European Central Bank cut the interest rates for the first time in nearly five years. It lowered its benchmark deposit rate by a quarter percentage point to 3.75 per cent as it felt it’s “now appropriate to moderate the degree of monetary policy restriction” after a 2.5 percentage points fall in inflation since its last rate rise in September 2023.
 

Just ahead of that, the Bank of Canada cut its target for overnight rate by an equal quantum to 4.75 per cent from 5