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Below the Comments on US Fed Rate Cut by Vishal Goenka, IndiaBonds.com

“The US Fed cut benchmark overnight rates by 25bps as expected. However, Governor Powell very distinctively highlighted that any further cuts in next December meeting is not a done deal. Their decision-making is further complicated by lack of published economic data due to US government shutdown.

This is a clear green lighting for RBI to cut repo rate in its next meeting in early December. Its last policy was defined as a dovish pause and that’s exactly what it did to markets by reigning in further widening of long end government yields. However, for proper transmission of earlier rate cuts to come through the banking sector, a flatter and lower long end yield curve is required. With US cutting rates, would expect RBI to also move in same direction and long end government bonds look attractive.”

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