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Below the Quote on Fed rate cut by 50 BPS points by Mr. Ashwani Dhanawat, ED & CIO, Shriram General Insurance

“Federal Reserve has cut interest rate by 50 basis point in September, marking its first reduction since 2020. This move signals the beginning of a cautious pivot, with the Fed projecting two additional 25 basis point cuts in 2024. Interestingly, this decision saw the first dissent from a Fed governor Michelle Bowman since 2005, advocating for a smaller cut. The Fed is growing more confident that inflation is aligning with its 2% target, while remaining committed to closely monitoring economic data to guide further adjustments. Projections now indicate a cumulative 100 basis point cut in 2025 and an additional 50 basis points in 2026.

While the Fed's pivot is significant, the Reserve Bank of India (RBI) is unlikely to follow suit in its upcoming meeting. The RBI is expected to maintain its current stance, illustrating how central banks can operate in an asynchronous manner, responding to their unique domestic macroeconomic conditions rather than simply mirroring the Fed's actions.”

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