Indian bonds remained volatile over the past week on uncertainties over the maiden offshore sovereign bonds issuance, according to a report by DBS Group Research.
With inflation remaining at elevated levels, central banks around the world, including the Reserve Bank of India (RBI), will kill excess demand in economy over the next six to eight months, sources in the know said. They also indicated that there could be a rate hike in June, when the inflation forecast for the current financial year would be raised. The RBI, the sources said, might announce more steps such as raising the limit on held-to-maturity (HTM) bonds to support government borrowings but might not come out with any further quantitative easing GSAP (Government Securities Acquisition Programme) measures.
The Reserve Bank of India on Tuesday hiked the cash reserve ratio by 25 basis points.
With this reduction, the one-year MCLR, to which most of its loan prices are linked, will come down to 8 per cent, the bank said in a statement.
The move by the second largest private sector lender will give better returns on fixed deposits, but will also make loans more expensive for existing customers.
About 24 fund houses saw a decline in their debt AUMs in the past one year.
Subdued prices of food items like vegetables pulled down retail inflation for the third month in a row to 5.3 per cent in August, within the RBI's comfort zone. While the Consumer Price Index (CPI)-based retail inflation declined to 5.3 per cent in August from 6.69 per cent in the same month a year ago, food inflation dipped at a much faster pace to 3.11 per cent from 9.05 per cent in August 2020. The food inflation was also lower than 3.96 per cent in preceding month of July.
The country's largest lender, SBI on Tuesday said it has cut savings rate by 25 basis points, or 0.25 per cent, to 2.75 per cent on all deposits. The new rate will come into effect from April 15, 2020.
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Declining prices of food items like vegetables pulled down retail inflation to 5.59 per cent in July, bringing it back within the RBI's comfort zone after two months, official data showed on Thursday. The retail inflation based on the Consumer Price Index (CPI) had remained above 6 per cent during May and June. The government has mandated the RBI to maintain retail inflation at 4 per cent, with a margin of 2 per cent on either side. The CPI based inflation stood at 6.26 per cent in June 2021 and 6.73 per cent in July 2020.
Over a five-year period, the benefit of a sharp drop in interest rates would mean saving Rs 76,880 -- a significant number. But if the rate cuts are slimmer, say 25 bps or the number of years left is barely one or two years, shifting may not make too much sense.
The implementation of MCLR from April 1 has already led to a rate cut of 10 basis points on home loans by the country's largest bank, State Bank of India, and others.
The government has already crossed the fiscal deficit at 132 per cent of the estimate as of December end.
Home loan rate for new customer is 9.9 per cent.
Economists expect the Reserve Bank to hike its key short-term lending and borrowing rates on July 27 to tame rising inflation, which is already in double-digits.
The hardening of the Wholesale Price Index follows an uptick in retail inflation.
Insurer likely to support Ratan Tata; reduction in stake might have been profit booking.
"The economy is going through a very difficult patch and business confidence has plummeted. New investments have slowed down," Assocham President Rajkumar Dhoot said during his interaction with RBI Governor D Subbarao ahead of the central bank's monetary policy review scheduled on April 17.
Lockdowns imposed by the states in April and May to contain the second wave of the deadly COVID-19 pandemic has likely led to the economy contracting 12 per cent in the June quarter as against 23.9 per cent contraction in the same quarter in 2020, says a brokerage report. The economy had its worst contraction on record in FY21 at 7.3 per cent as the 2.5 months of unplanned lockdown announced by the centre with just a four-hour notice had crippled the economy in the first quarter with a massive 23.9 per cent contraction, which improved to -17.5 per cent in the second quarter.
These are the highlights of RBI Governor Shaktikanta Das's statement and resolution of the Monetary Policy Committee (MPC):
One risk of investing in a very low-cost ETF is if a fund house runs it at below cost, it could close it if it fails to attract institutional money
State Bank announced a 15 basis points reduction in its lending rates, effective August 10 across all tenors.
The retail inflation rate breached the 6 per cent upper tolerance limit of the RBI for the first time in seven months in January, while the wholesale price index stayed in double-digits for the 10th month in a row, showed two sets of data released by the government on Monday. Retail inflation, the key input for the RBI while reviewing the repo rate every two months, soared during the month mainly because of a spike in certain food items. The previous high for retail inflation was 6.26 per cent in June 2021.
As per the Budget estimate, net borrowing by the government in the current fiscal is pegged at a whopping Rs 3,97,957.47 crore (Rs 3,979.57 billion) to fund its widening fiscal deficit projected at 6.8 per cent of GDP this fiscal due to a slew of measures taken to boost the economy, which is facing the impact of financial meltdown.
As liquidity eases and inflation turns negative, Dewan Housing Finance Corporation on Friday said it expects home loan rates to come down by 25-50 basis points in the near-term.
ICICI Bank has increased auto loan rates by 100 basis points with effect from Monday, a bank official told PTI.
Low home loan rates by banks could put large players in an advantageous position over smaller non-bank players, believe analysts.
The chief of the country's second largest public-sector lender said interest rates should fall as and when inflation eases, but pointed out the need to lower deposit rates first.
China won the top prize on the basis of having won the round-robin stage.
Minutes of the MPC meeting show Das felt economy needs more monetary stimulus as inflation outlook remains uncertain.
The central bank has, so far, cut its repo rate by 125 bps.
New borrowers should go for banks over housing finance companies as the new benchmark -- MCLR -- is more transparent.
What could be more uncertain than Virat Kohli's agonising wait for a century for over two years? Perhaps it's what you will pay tomorrow morning to fill your vehicle's tank. Pump prices have joined cricket scores as the country's favourite discussion topic. Steep increases invite widespread protests, while moderate additions make the government anti-reformist. The ongoing fuel price conundrum is no different.
After posting double-digit growth for the fourth consecutive quarter, chief executive officer and managing director Salil Parekh tells Yuvraj Malik and Debasis Mohapatra that the firm is not facing any delay in ramping up of large deals.
For investors, every cost-saving means higher returns.
With decline in number of fresh COVID-19 cases and easing of restrictions, the country's gross domestic product (GDP) will grow at 8.5 per cent in FY2021-22, according to credit rating agency Icra Ratings. It expects the gross value added (GVA) at basic prices (at constant 2011-12 prices) to grow at 7.3 per cent in FY2022. "The impact of the second wave of COVID-19 and the ensuing state-wise restrictions was seen across a variety of high frequency indicators in April-May 2021.
In terms of magnitude of rate cuts, Morgan Stanley expects 50-100 basis points of policy rate cuts in 2015, depending on the inflation trajectory, which in turn will be dependent on the trend in commodity prices, fiscal deficit and rural wage growth.
The RBI is understood to be dithering since it would want more clarity on the cost of the fiscal policies the new government would undertake before it decides to cut rates, even though it has pencilled in a lower gross domestic product growth rate for this fiscal year.
Despite lower growth scenario; companies say reworking strategy
Recent rates cuts by most banks may not have a significant impact on margins, say analysts.
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