THE FED ACTION - IMPLICATIONS FOR INDIA
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- THE FED ACTION - IMPLICATIONS FOR INDIA
The Federal Reserve slashed its benchmark interest rate by a bigger-than-expected 50 basis to a range of 4.75% to 5%, after holding it for over a year at its highest level in two decades. This move by an overwhelming majority of 11 to 1 marked an aggressive start to a policy shift aimed at providing an impetus to the US labor market in the wake of softening inflation at 2.5% “moving sustainably down to 2%” and the need to ease the cost of borrowing. To place matters in perspective, it may not be unreasonable to recapitulate that the last time the Federal Open Market Committee (FOMC) or the Federal Open Market Committee cut by half a percentage point was way back in 2008, during the global financial crisis, other than of course the devastating Covid-19 pandemic period.