Suhani Adilabadkar
First the Union Budget and then the RBI gave good news in 2025. While the government gave happiness to the Indian middle class, the Reserve Bank of India added more cheer by reducing interest rate by 25 basis points in February 2025. The monetary policy committee (MPC) unanimously reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.25%. Consequently, the standing deposit facility (SDF) rate is adjusted to 6% and the marginal standing facility (MSF) rate and the Bank Rate to 6.50%.
The US household borrowers are not such a happy lot. The US Federal Reserve (US Fed) held interest rates in January 2025 and after the inflation rate rose to 3% in the month of January, the Central Bank stands validated. Rate cut seems to be uncertain with the US employment rate still in the comfort zone of 4%.
While the inflation data in both the economies is closely monitored, the Indian investors currently are more concerned about Prime Minister Modi’s two day US visit and how India is going to negotiate on the US Tariff Table. For US investors, the next US Fed meet is on March 18-19. In the present uncertain scenario driven by global tariff war, softening of retail inflation in the US economy looks uncertain.
