Reserve Bank of India cut interest rates for a third time this year.
Wholesale price based inflation declined to a 3-month low of 1.89 per cent in November on cheaper food items, and experts predicted a 0.25 per cent interest rate cut by the RBI in the policy review in February. The Wholesale Price Index (WPI) based inflation was 2.36 per cent in October 2024. It was 0.39 per cent in November, last year. In August, 2024, it was 1.25 per cent.
'Young investors should focus more on equity, while retired senior citizens should prioritise fixed income.' 'Mid-career investors should aim for a balanced allocation.'
The Reserve Bank of India has no plans to change the repo rate as of now, a senior official told Reuters of Friday.
The Monetary policy committe comprising 6 members voted 6-0 in the favour of the rate cut.
Reserve Bank on Tuesday kept the bank rate and CRR unchanged, but hiked repo and reverse repo rate by 0.25 per cent to 5.5 per cent and 6.5 per cent respectively as part of measures to rein in inflation.
The economic growth is likely to moderate to 6.1 per cent, slowest in over seven quarters, from 6.6 per cent last year same period.
Shares of state-owned bank stocks were under pressure on Monday due to muted deposit and credit growth numbers reported by these lenders in the October-December quarter (Q3) of 2024-25 (FY25). The Nifty PSU Bank index was down 4 per cent, with Union Bank of India emerging as the biggest loser as its shares fell 7.5 per cent to close at Rs 114.7, followed by a 5.7 per cent drop in shares of Bank of Baroda (BoB) to Rs 228 and a 4.7 per cent slide in shares of Bank of India to Rs 99.8 on the National Stock Exchange.
From the 30-share pack, Adani Port, Bharti Airtel, Asian Paints, IndusInd Bank, Bajaj Finserv, Reliance Industries, Infosys, UltraTech Cement, HDFC Bank, HCL Technologies and ICICI Bank were among the laggards. Tata Motors, Axis Bank, Maruti, Larsen & Toubro, ITC and Tata Steel were among the gainers.
Beyond the fourth quarter of 2019, the report does not see space for further cuts primarily as headline inflation is likely to pick up and cross the 4 per cent target by the end of the year, and output gaps are also estimated to close.
Former Reserve Bank Deputy Governor S S Tarapore on Thursday said that the apex bank should not lower its repo and cash reserve ratio rates in its forthcoming monetary policy review.
The repo rate, at which the central bank lends to the system, will come down to 5.75 per cent after the cut.
Indian economy is in a sweet spot, with a mix of solid growth and moderating inflation, Moody's Ratings said, forecasting a 7.2 per cent GDP growth in the 2024 calendar year and 6.6 per cent in the next. In its Global Macro Outlook 2025-26, the rating agency said the global economy has shown remarkable resilience in bouncing back from supply chain disruptions during the pandemic, an energy and food crisis after the Russia-Ukraine war began, high inflation and consequent monetary policy tightening.
Reserve Bank of India Governor Shaktikanta Das on Friday said the central bank will ensure adequate liquidity in the system to ease the financial stress caused by the Covid-19 pandemic. The central bank reduced the reverse repo rate -- the rate at which banks park their fund with the central bank -- by 25 basis points to 3.75 per cent.
The three day MPC meeting began on Monday and the decision will be announced on Wednesday by RBI Governor Shaktikanta Das.
Short-term government bonds fell behind longer-dated securities in demand this month so far due to a liquidity crunch in the banking system and expectations of a delay in a rate cut, said market participants. Investors have favoured longer-tenure government bonds, or g-secs, with insurance companies and pension funds leading the charge by stocking up on those with maturities of 30 years and more. Preference for longer-term securities was strengthened by the conclusion of the borrowing programme, which compelled institutional investors to fulfil their requirements in the secondary market.
Reserve Bank of India Governor Bimal Jalan said on Friday that there was no proposal to lower the short-term benchmark repo rate now.
Bond market expects the Reserve Bank of India to cut the repo rate after the government buys back gilt worth over Rs 84,000 crore (Rs 840 billion), hopefully this month.
As far as the Indian households are concerned, although the leverage ratio in this basket has multiplied nearly 3 times in the past decade, it is still well below not just developed but also most other developing economies.
The Reserve Bank of India on Saturday decided to reduce the one-day and 14-day repo rate under the liquidity adjustment facility by 0.5 per cent to 4.5 per cent with effect from Monday.
Reserve Bank of India governor Bimal Jalan reiterated Monday the bank's soft monetary bias but said there was no immediate plan to cut the short-term repo rate.
India's central bank kept its key repo lending rate unchanged at 6.75 percent on Tuesday.
Banking shares are down up to 11% after the Reserve Bank of India has increased the policy repo rate by 25 basis points from 7.25% to 7.5% with immediate effect.
CRR remains unchanged at 4%; first repo rate cut since May 2013.
Shaktikanta Das will demit the office on Tuesday after completing six years as the 25th Governor of the Reserve Bank of India. Revenue Secretary Sanjay Malhotra will replace him as the 26th Governor. He was appointed as the Governor on December 12, 2018, after the abrupt exit of Urjit Patel.
The central bank has also left the Bank Rate and the Cash Reserve Ratio unchanged at 6 per cent and 5 per cent, respectively, in the annual policy announcement 2007 released on Tuesday.
Benchmark equity indices Sensex and Nifty pared early gains to settle lower on Wednesday due to late selling in index major Reliance Industries, ITC and HDFC Bank even as the RBI took the first step towards a rate cut in its monetary policy review. Erasing its early gains, the 30-share BSE Sensex fell 167.71 points or 0.21 per cent to close at 81,467.1. During the day, it surged 684.4 points or 0.83 per cent to hit an intra-day high of 82,319.21.
'Consider 40% to 50% in equities, 10% in gold as a hedge, and the remaining 30% to 40% split between multi-asset funds and hybrid funds.'
Sanjay Malhotra takes charge as the 26th RBI governor at a time when headline retail inflation has shot up to 6.2%.
The Reserve Bank has kept the key policy rates unchanged, while the Cash reserve Ratio (CRR) has been cut by 25 bps to 4.25%.
The primary focus of monetary policy remains the containment of inflation and anchoring of inflation expectations.
FDs are not advisable for long-term wealth creation as their post-inflation, post-tax returns are not very attractive.
High frequency indicators suggest that a growth recovery is underway, but very tentatively and with weak legs, says Saugata Bhattacharya.
This is the fifth straight cut in rates by the Reserve Bank of India in as much policy reviews in 2019, and takes the total quantum of reductions to 1.35 per cent.
Funds raised by banks through certificates of deposit in December clocked the highest in the financial year 2023-24 as liquidity remained tight in the system with the Reserve Bank of India (RBI) infusing Rs 2.01 trillion on Monday, the highest in the current financial year. The liquidity deficit in the banking system widened to more than Rs 2 trillion on Monday on the back of advance tax outflows, market participants said. Around Rs 4 trillion worth of outflows are expected because of advanced tax and goods and services tax (GST) payments in December.
The US Fed rate cut of 50 basis points is unlikely to have any significant impact on foreign inflows into India, Economic Affairs Secretary Ajay Seth said on Thursday. He said the US Federal Reserve has done what it assesses is good for the largest economy in the world, but the RBI will take a decision on interest rate cut keeping the Indian economy in mind. "It is a positive for the global economy, including the Indian economy. "It is a 50 basis points cut from a high level.
Banks and realty among the most hit on account of high borrowing costs.
Reserve Bank of India chief Bimal Jalan reiterated on Monday the bank's soft monetary bias but said there was no immediate plan to cut the short-term repo rate.
Returns of liquid funds are meant only for the short term and don't help investors create wealth over the long term, as equity funds do.
Since November 3, the day the central bank's special window was opened, bids worth Rs 2,775 crore (Rs 27.75 billion) were placed at the auctions against the total outstanding amount of Rs 60,000 crore (Rs 600 billion) at the fixed rate of 7.5 per cent. "It's a commercial decision of banks to lend money to NBFCs. It implies that banks are still cautious about lending to NBFCs and they might take some more time to start lending normally to us," said an NBFC chief.
