Federal Reserve Rate Hike Creates Complex Scenario for India’s Central Bank

The Federal Reserve’s recent move to increase its policy rate, marking the 11th rise in 12 meetings, has stirred extensive discussions in economic circles.

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Despite global uncertainties, India has maintained robust momentum since the COVID-19 pandemic, registering a growth rate of 7.2% in FY 2022-23.

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The complexity deepens due to the US’s unexpected economic performance. Which saw a growth rate of 2.4% in the April-June quarter of 2023, contrary to expectations.

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Additionally, the US Consumer Price Index (CPI) and labor market have displayed signs of moderation

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As India grapples with these challenges, its prudent fiscal measures and potential for sustained economic growth are rays of hope that might guide the RBI’s path forward.

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