Will RBI cut rates in the upcoming monetary policy meeting?

RBI rate cuts: The Reserve Bank of India (RBI) is gearing up for its first bimonthly monetary policy meeting of the financial year 2024-25 from April 3rd to April 5th. With the RBI governor urging caution against premature actions, the central bank's decision will undoubtedly weigh both domestic economic dynamics and global trends, including the strategies of its international counterparts. Various polls are indicating that RBI will keep the repo rate steady even in the upcoming policy as the Fed in its last meeting went the expected way by keeping the benchmark interest rates at 5.25-5.50 per cent.

US Fed
Starting with the US Federal Reserve, despite persistent inflation concerns, the Fed opted for stability by maintaining its benchmark interest rates at 5.25-5.50 per cent. However, they hinted at potential rate cuts later in the year, reflecting a cautious approach to managing economic growth amid price pressures. This decision aligns with their revised growth forecast of 2.1 per cent for the year, indicating confidence in the US economy's resilience.
The US Fed in its second policy-setting meeting of the year unanimously voted to hold the policy rate at the 23-year high mark. The US Fed said that it “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward two per cent.”

The US Fed kept the rates at end-2024 at the midpoint between 4.50 and 4.75. This means they still expect 0.75 percentage points of cuts before the end of the year, which would likely translate into three 0.25 percentage point cuts.

BOJ rate hike
On the flip side, when the entire world is looking out for a rate cut, the Bank of Japan is hiking the interest rate. The Bank of Japan took a bold step by announcing its first interest rate hike in 17 years, shifting from its longstanding negative interest rate policy to set rates in the range of 0-0.1 per cent. The move signifies a vote of confidence in Japan's economic recovery and a departure from deflationary concerns that have plagued the nation for years.
The European Central Bank maintained a steady course on interest rates but signalled a potential shift towards rate cuts to address economic hurdles within the Eurozone. This forward-looking approach highlights the ECB's commitment to navigating challenges such as sluggish growth and inflationary pressures.