US Fed: Long wait for cheap loans! Reserve Bank may take more time

People waiting for the era of cheap interest rates may have to be disappointed. There are expectations that there will be a delay in the reduction in interest rates from home loan to car loan and personal loan. The recent decision of the US Central Bank has increased the fear of the wait being longer.

Federal Chairman made this announcement

After the recent policy meeting of the US Central Bank Federal Reserve, Chairman Jerome Powell gave information about the latest strategy on Tuesday. He said that the Federal Reserve has decided to continue adopting the wait and watch strategy to reduce interest rates. This means that the Federal Reserve is going to wait for inflation data to come down before taking a decision on reducing interest rates.

It will take more time than expected

Before this It was expected that the Federal Reserve could make its first cut in interest rates by the middle of the year. However, later the hope of reduction in interest rates ended due to increase in the prices of many essential commodities and the return of inflation again. Fed Chairman Powell also said that now it is going to take more time than earlier estimates to create confidence enough to reduce interest rates.

Impact of the Fed Reserve's decisions

American Postponing the decision to cut interest rates by the Federal Reserve is also likely to have an impact on the policy of the Reserve Bank. Most of the central banks of the world decide their policy rates on the lines of the US Fed. After Covid, when the interest rates had gone to record low level and then in May 2022, when the interest rate increase was started, the Reserve Bank had imitated the Federal Reserve. After declaring inflation under control in the MPC of April 2022, the Reserve Bank held an emergency meeting in May 2022 and started increasing interest rates, because at that time the Federal Reserve had announced a change in the policy.

Retail inflation is more than 4 percent

If we look at the conditions at the domestic level, they are not yet favorable for reducing interest rates. In the data released a day ago, wholesale inflation has reached a 13-month high. Before that, there had been some decline in the retail inflation figures but its rate is still above the Reserve Bank's target of 4 percent. The Reserve Bank takes decisions on interest rates by looking at the retail inflation rate.

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