RBI's intention to keep its target inflation rate at 5% was the main reason behind keeping rates unchanged, says Adhil Shetty, CEO of BankBazaar.com.
Analysts at Barclays pitched for a 0.25 per cent cut to generate demand advising the central bank to throw caution to the wind.
Debt funds typically held 0-5 per cent of their portfolio in cash and cash equivalents before this Sebi diktat.
Business houses expect rate cut in next RBI policy.
Experts say this is a good time to buy a house for self-use, points out Sanjay Kumar Singh.
Home and auto loans are likely to become more cheaper with several PSU banks promising to revise their lending rates if RBI eases its monetary policy on Saturday.
In comparison to other asset classes, globally, gold rallied significantly after many years to deliver 18.4 per cent returns in 2019.
The Reserve Bank has raised short-term borrowing rate (reverse repo) by 0.50 percentage points and lending rate (repo) by 0.25 percentage points.
Should deposit growth continue to outpace credit growth, banks may end up ceding some hard-earned 25-50 bps improvement in profitability or net interest margin gained in the past two years.
The Reserve Bank has decided to keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of their net demand and time liabilities and keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.25 per cent.
Currently, banks follow system of internal benchmarks, including Prime Lending Rate, Benchmark Prime Lending Rate, Base rate and Marginal Cost of Funds based Lending Rate.
After swinging 439 points during the day, the 30-share Sensex ended 141.33 points, or 0.38 per cent, lower at 37,531.98. It hit an intra-day low of 37,480.53 and a high of 37,919.47.
Retail inflation crossed the RBI's comfort level and rose to 5.21 per cent in December on increase in prices of food items.
Industry houses are emphatic with the RBI pruning repo rate and CRR by 0.25 per cent each after a long nine months in its third quarter monetary policy review.
'The first year of the Modi government's second term has laid the roadmap for the future and we will embark on it with gusto,' promises Gopal Krishna Agrawal, the BJP's national spokesperson on economic affairs.
If this turns into reality, India's gross domestic product (GDP) growth will be the lowest since 2012-13, which could severely hit job creation and income growth in the near term.
The Reserve bank of India has just increased its repo rate and CRR and there are chances that banks may soon increase the interest rates on home loans.
A spiralling inflation is likely to force the Reserve Bank of India to up the Cash Reserve Ratio by 0.75 per cent in FY 09, along with a 1 per cent hike in repo and reverse repo rates, global financial services major, StanChart said.
Encouraged by softening inflation, the RBI on Thursday decided to cut the benchmark interest rate by 0.25 per cent to 7.75 per cent with a view to boost growth.
Will your home loan rates drop now that the RBI has signalled the onset of lower interest rates after 0.25 per cent cut in repo rate and CRR?
Economists say RBI to raise policy rates in annual policy statement in April.
SBI last reduced its lending rate in January by cutting it by 0.05 per cent.
Already reeling under a demand slump, automobile manufacturers have expressed disappointment over the RBI's decision to hike short term lending rate saying it is likely to impact the interest rates on car and automobile loans further.
Financial services firm AnandRathi analysed the key points of the policy soon after it was announced.
The SBI report ruled out a October rate hike
RBI Governor Raghuram Rajan asked banks to follow suit and pass on the rate cuts.
Ahead of RBI's monetary policy review, SBI on Monday expressed hope the apex bank will cut interest rates by 0.5 per cent and CRR by up to one per cent to boost sagging growth.
Declining price of vegetables pulled down inflation to over three-year low of 5.96 per cent in March, core inflation moderated to 3.5 per cent and food price inflation also eased to 8.2 per cent, which is likely to prompt the RBI to consider a rate cut in its annual monetary policy next month.
After two rate hikes in less than six weeks aimed at curbing inflation, RBI Governor Raghuam Rajan on Wednesday said the central bank may be done with interest rate increases as their impact on the economy is assessed.
The bonds were available for seven years. Since these were not traded in the secondary market, redemption took place at maturity.
The Reserve Bank of India, for the second straight time, on Thursday kept its key policy rate unchanged at 5.15 per cent, maintaining its accommodative policy stance as long as it was necessary to revive growth. The central bank retained GDP growth at 5 per cent for 2019-20 and pegged it at 6 per cent for the next fiscal.
Costlier vegetables and eggs pushed up retail inflation to a nearly six-and-a-half year high of 7.61 per cent in October, keeping it significantly above the comfort zone of the Reserve Bank.
The uncertainty created by the jump in COVID-19 infections and localised lockdowns prompted RBI Governor Shaktikanta Das and other members of the rating setting panel MPC to unanimously vote for status quo in interest rates and an accommodative policy stance to support growth, as per minutes of the meeting released on Thursday. "The need of the hour is to effectively secure the economic recovery underway so that it becomes broad-based and durable," the Governor said during the three-day meeting of the Monetary Policy Committee (MPC) which ended on April 7. The renewed jump in COVID-19 infections in several parts of the country and the associated localised and regional lockdowns add uncertainty to the growth outlook, he observed, as per the minutes of the meeting released by the central bank.
Due to tight liquidity condition, RBI would cut cash reserve ratio.
In the Sensex pack, Sun Pharma was the biggest gainer, rallying 4.48 per cent, followed by Bajaj Auto, Tata Motors, Coal India, Hero MotoCorp, Maruti and HCL Tech, rising up to 3.01 per cent. While, RIL, PowerGrid, HDFC, L&T, IndusInd Bank, NTPC and Bajaj Finance declined up to 1.50 per cent.
To neutralise this, RBI has been doing forward swaps
Reserve Bank's recent policy stance has earned for it praise as well as brickbats.
When looking for alternatives, consider several parameters -- your investment horizon and liquidity requirement, post-tax returns, and risk.
Growth remains weak, inflation is within 2-6% range, rate cut would help recoup forex reserves
