Fixed Income House View - November 2024 by Tata Mutual Fund
GLOBAL MARKETS
Global Central Banks on rate cut cycle
* Federal Open Market Committee (FOMC) in its Feb meeting, reduced the target range of its Fed Funds Target Rate (FFTR) to 5.50% - 4.75%
* This was the second rate cut after having raised rates elevated at 5.25% - 5.50% since July 2023
* The European Central Bank and Bank of England also reduced deposit rates to 3.4% and 4.75%.
* RBI governor has stated their rate cut decisions are influenced by domestic factors even though they consider global developments.
* RBI in its monetary policy has been maintaining its repo rates at 6.50%. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.
* Maintaining the stance, RBI mentioned it is a pause and not a pivot, after cumulative 250 basis points of hike in repo rates since April 2022 and has majorly been on a longish pause in CY2023.
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