The muted CPI inflation print at 5% earlier this week, followed by a similar WPI number released Wednesday, seems to have spurred India's central bank into action, is how the economists are reading into Reserve Bank of India governor Raghuram Rajan's 25 basis point cut in repo rate.
Union Finance Minister Nirmala Sitharaman on Monday said people are finding current interest rates "very stressful" and urged banks to make them affordable. Speaking at an event organised by State Bank of India, the finance minister said that at present, India requires industry to ramp up and invest in new facilities, and added that lowering lending rates can help achieve the "Viksit Bharat" aspiration.
The Reserve Bank of India (RBI) is likely to take a "more dovish" stance in its upcoming monetary policy review on December 2 and may go in for a cut repo rate in February, according to a British brokerage house report.
Home loan consumers shouldn't rejoice yet expecting a cut in their home loan rates, feels Harsh Roongta, CEO, Apnapaisa.com, a day after the banking regulator Reserve Bank of India cut the repo rate by 0.5 per cent.
Reserve Bank of India (RBI) Governor Shaktikanta Das has said the decision on interest rate moderation will be based on long-term inflation trajectory and not monthly data. The Monetary Policy Committee (MPC) headed by the RBI Governor is scheduled to meet between October 7 and 9 and take call on interest rate. The RBI kept the repo rate unchanged at 6.5 per cent for the ninth time in a row amid risks from higher food inflation.
The reverse repo ceiling was imposed in March when liquidity in the banking system was tight and the overnight call rate had touched a peak of 80 per cent.
The cost of deposits is on the rise, but banks can't raise interest rate on close to 60% of their loan books, points out Tamal Bandyopadhyay.
Finance Minister P Chidambaram on Tuesday said that the 0.25 per cent hike in repo rates by the Reserve Bank of India
India's manufacturing sector growth eased slightly in July, on softer increases in new orders and output, while cost pressures and demand strength led to the steepest increase in selling prices since October 2013, a monthly survey said on Thursday. The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) moderated slightly from 58.3 in June to 58.1 in July.
Among the 30 Sensex firms, Asian Paints, Infosys, JSW Steel, UltraTech Cement, Power Grid, Larsen & Toubro, HCL Technologies and Tata Steel were the biggest laggards. Tata Motors, HDFC Bank, Bharti Airtel, ITC, IndusInd Bank and Axis Bank were the gainers.
Foreign investors have injected close to Rs 33,700 crore in domestic equities in this month so far primarily due to interest rate cut in the US and resilience of the Indian market. This also marks the second highest inflow in a month in this year so far, the last one being in March, when Foreign Portfolio Investors (FPIs) infused Rs 35,100 crore, data with the depositories showed. Going ahead, the trend of FPIs buying is likely to continue in the coming days, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.
The Reserve Bank of India's (RBI's) state of the economy report observed that any durable alignment of headline retail inflation with the target of 4 per cent could recommence in the second half of FY25 and sustain until numbers closer to the target are seen during the course of FY26, dashing hopes of any reduction in the policy repo rate in the current financial year. The report, authored by RBI staffers, including Deputy Governor in charge of monetary policy Michael Patra, said though headline numbers may fall in July and August due to base effect, it is likely to reverse in September.
It is to be seen if SBI under Setty, who will have a three-year term, can ride the economic cycle to take SBI to new heights, navigating some of these challenges.
Wholesale inflation fell to a 4-month low of 1.31 per cent in August due to a decline in prices of vegetables and fuel, even though onion and potato prices spiked, according to official data released on Tuesday. Wholesale price index-based inflation fell for the second straight month in August after it hit a high of 3.43 per cent in May. Inflation in July was 2.04 per cent. In August last year, WPI inflation was (-) 0.46 per cent.
In its Third Quarter Review of Monetary Policy 2012-13, the Reserve Bank of India has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8.0 per cent to 7.75 per cent with immediate effect.
The Reserve Bank of India's (RBI's) job to bring down inflation is not over, and any premature move on the policy front could undermine the success achieved so far on the price situation, according to RBI Governor Shaktikanta Das. RBI's rate setting panel, Monetary Policy Committee (MPC), had met for three days from February 6-8. The panel decided to leave the key policy rate unchanged at 6.5 per cent for the sixth time in row.
The report, however, said it remains watchful of the upside risks to inflation emanating from pass-through of minimum support prices (MSPs), adverse movement in crude oil prices, volatility in global financial markets, lagged impact of the rupee weakness on input prices, adverse implications from fiscal slippage and staggered impact of HRA increases by states and its second-round impact.
This week, bond yields are expected to soften while the rupee could strengthen.
The central bank deputy chief said on Monday that the monetary authorities were unlikely to lower the repo rate from the current five per cent for quite some time.\n\n\n\n
The Reserve Bank of India on Thursday opted for a pause second time in a row, maintaining key benchmark policy rate at 6.5 per cent as inflation moderates. The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022. Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) unanimously decided to keep the rate unchanged at 6.5 per cent.
'You will see him frequently asking customers -- especially retail -- about service experience, pain points, areas of improvement and suggestions.'
Governor Urjit Patel and his deputies spoke to the media about the central bank's decision to raise the repo rate.
'If all goes well, we may well hit or even surpass the forecast growth rate.'
The Reserve Bank of India on Wednesday decided to keep the policy rate unchanged for the tenth time in a row but changed its stance to 'neutral' that may lead to a cut in the forthcoming policies. RBI maintained status quo despite the US Federal Reserve lowering the benchmark rates by 50 basis points last month.
'Some buyers believe prices may correct in the future.' 'This is unlikely. Many developers are increasing prices amid strong sales and inflationary trends.'
The repo rate, at which RBI lends to the banking system, will be at 7.5%
The Reserve Bank of India on Friday decided to keep the benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance as the economy is yet to recover from the impact of the second Covid wave.
Mukherjee said uncertainty was still there on oil prices front due to unrest in West Asia and North Africa.
The need for money among banks, especially for short-term funds, may turn more intense in the last month of the financial year to feed the demand for capital for tax payments and meet year-end targets. The mobilisation of funds via the certificate of deposits (CDs) has seen a threefold increase to over Rs 60,000 crore in the fortnight that ended February 23 from around Rs 20,000 crore in the fortnight of January 26, 2024, according to the Reserve Bank of India (RBI) data.
Madhabi Puri Buch, the first female chairperson of Sebi, doesn't plan to rest on her laurels in her third and final year in office and has set out an ambitious goal, such as moving towards a same-day and instantaneous settlement cycle for the secondary market.
The Reserve Bank of India (RBI) conducted two overnight variable rate reverse repo (VRRR) auctions on Tuesday, marking the first instance of such action in a single day. The move aimed to reduce liquidity from the banking system, which has been largely in deficit mode for the past four months. Market participants noted that the central bank held the second VRRR auction due to its awareness of funds being released to banks during the day.
Majority of the experts expect a 25 basis point reduction.
Wholesale inflation fell to a 3-month low of 2.04 per cent in July on decline in prices of food items especially vegetables, government data released on Wednesday showed. The decline in wholesale price index (WPI) based inflation in July came after it rose for four months in a row till June, when it was 3.36 per cent. It was (-) 1.23 per cent in July last year. In April wholesale inflation stood at 1.19 per cent.
British banking major RBS on Thursday said it expects the Reserve Bank to cut key rate by 25 basis points or 0.25 per cent in its monetary policy review next week, leaving the cash reserve ratio (CRR) unchanged.
'Investment creates capacity and reduces inflation. Income, employment, and savings rise.'
The main reason was that CPI inflation would likely remain below 4 per cent till July.
As the policy rate has seen a steady increase since May 2022, the percentage of loans offered at interest rates below 8 per cent have declined sharply, dropping from 53 per cent in March 2022 to 18 per cent by June 2023, according to a report by the Reserve Bank of India (RBI). The share of bank loans with interest rates of 10 per cent or higher rose from 22 per cent to 34 per cent during this period, reflecting the impact of a 250 basis point (bps) hike in the policy repo rate by the RBI's Monetary Policy Committee. In response to the rise in repo rate, 32 domestic banks have made corresponding upward revisions to their repo-linked external benchmark-based lending rates (EBLRs), aligning them with the magnitude of the rate hike.
The RBI is fully aware that the high-cost loans and high indebtedness of the borrowers could pose financial stability risks, if not addressed by these NBFCs. Governor Shaktikanta Das has issued a stern warning, saying the RBI is closely monitoring these areas and will not hesitate to take appropriate action, if necessary, if the culprits don't opt for self-correction. Watch out for some action, soon, notes Tamal Bandyopadhyay.
Reserve Bank of India governor, Bimal Jalan, said on Monday there was no proposal to cut the repo rate as of now and added the bank's bias towards soft rates would continue.
Deputy Governor Michael Patra warned about the spillover effects of food inflation.
