After 5 years this central bank cut the interest rate, now look at RBI’s decision

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The European Central Bank (ECB) has cut interest rates by a whopping 25 bps. The ECB cut its benchmark rate to 3.75% from a record high of 4% at its Bank Council meeting in Frankfurt, Germany. Let us tell you that for the first time since the year 2019, the ECB has reduced the interest rate. The European Central Bank has cut interest rates ahead of the US Federal Reserve and the Bank of England. However, the central bank is yet to get relief on the inflation front.

Retail inflation has increased

However, retail inflation in the European Union rose to 2.6 percent year-on-year in May as consumer goods prices rose. Recently, the European Union’s statistics agency Eurostat, based on data collected from 20 member countries, said the inflation rate in May was higher than April’s 2.4 percent. However, experts expected inflation to be 2.5 percent in May.

Let us tell you that the European Union, which uses the Euro currency, faced inflation due to high fuel prices after the outbreak of the Russia-Ukraine war. However, it is now under control to a large extent.

Other countries are also giving relief

Central banks have already cut rates in smaller economies, including Sweden, Switzerland, Hungary and the Czech Republic. Bank of England policymakers are due to meet on June 20, but it is unclear whether the governing board will cut rates to 5.25%.

Keep an eye on RBI on Friday

The three-day meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has begun. Reserve Bank of India Governor Shaktikanta Das will announce the decisions taken by the Monetary Policy Committee on Friday. Experts believe that the central bank is not expected to cut interest rates (repo) as inflation is still a concern. The repo rate remains unchanged at a high of 6.5 percent from February 2023. Amid the booming economy, it is believed that the MPC will refrain from cutting interest rates.

The central bank last raised the repo rate to 6.5 percent in February 2023 and has kept it unchanged for seven consecutive times since then.

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