Weighed down by a weak rupee, the Reserve Bank on Tuesday chose to keep all key interest rates unchanged and asked the government to take urgent steps to reign in the high current account deficit.
With inflation turning negative, industry has been demanding interest rate cuts to propel demand. However, RBI Governor D Subbarao had said there is no threat of deflation as food and crude oil prices are still firm.
With inflation comfortably below the Reserve Bank of India's (RBI's) 4 per cent median target and likely to undershoot its 3.7 per cent projection for 2025-26 (FY26), there is room for the monetary policy easing cycle to be sustained, the Finance Ministry said on Monday. The comments, featured in the ministry's Monthly Economic Review for June 2025, assume significance ahead of the Monetary Policy Committee (MPC) meeting of the Reserve Bank of India (RBI) scheduled to begin from August 5.
The Indian government has extended the Reserve Bank of India's (RBI) mandate to maintain retail inflation at 4 per cent, with a tolerance band of 2 per cent on either side, for another five years until March 2031.
The policy will be presented in the backdrop of rising inflation.
The Lok Sabha elections in 2024 are not a consideration when it comes to monetary policymaking, said Reserve Bank of India governor Shaktikanta Das to underscore the central bank's commitment to controlling inflation. "It's not possible for me to comment what we do in the next MPC (Monetary Policy Committee), but one thing I can tell and I would like to make it very clear-that the fact of elections coming up in 2024 is not a factor at all so far as monetary policymaking is concerned. "Monetary policymaking is for checking (and) controlling inflation," Das said at the Business Standard, BFSI Insight Summit.
After a 25 basis point rate cut in December, the RBI on Friday decided to pause on the policy rate front amid geopolitical uncertainties.
The RBI's bi-monthly policy review on June 3 will be the first after Prime Minister Narendra Modi assumed office on May 26.
The Reserve Bank of India has kept the key short term lending rate (repo rate) unchanged at 7.25%.
Even if there is an early agreement on a cessation of hostilities in West Asia, the price shock will not go away easily, points out A K Bhattacharya.
Sanjay Malhotra has made structural changes to banking regulation to bring down costs and increase efficiency. Plus, he kicked off a benign interest regime. But there are challenges ahead.
Ahead of the Reserve Bank of India's (RBI's) monetary policy review in the first week of December, major public sector non-banking financial companies (NBFCs) - the National Bank for Agriculture and Rural Development (Nabard), Small Industries Development Bank of India (Sidbi), Power Finance Corporation (PFC), and Indian Railway Finance Corporation (IRFC) - plan to raise up to Rs 24,000 crore together through bond issuancesk.
Reserve Bank of India Governor Yag Venugopal Reddy presents the First Quarter Review of Annual Statement on Monetary Policy for the Year 2006-07.
Overall economic activity continued to hold up in November with demand conditions remaining robust, thanks to strengthening urban demand, but manufacturing and rural demand showed some signs of deceleration even as services remained strong, according to an article on the State of the Economy written by Reserve Bank of India (RBI) officials in the central bank's December bulletin.
The rupee continued to face pressure in the first half of the current financial year (FY26), hitting fresh lows against the dollar, due to strengthening of the greenback, rising crude oil prices, and foreign outflows. Rupee has depreciated by 3.7 per cent so far in the current financial year after starting at a good note in April.
Reserve Bank of India (RBI) Governor Sanjay Malhotra, with Deputy Governors Poonam Gupta, Swaminathan J, T Rabi Sankar, and M Rajeshwar Rao, responded to a range of queries in the post-policy interaction with the media
The RBI's monetary policy committee is expected cut benchmark interest rate by 25 basis points in its policy review meeting next month to push growth, India Ratings and Research (Ind-Ra) said on Thursday. "We expect the headline inflation in FY25 to cool off to 4.7 per cent. Monetary easing may be limited to 75 bps in FY26," Ind-Ra Chief Economist and Head Public Finance, Devendra Kumar Pant said.
Indian economy grew by 7.8 per cent in April-June -- the highest in five quarters -- before the disruptive US tariffs were imposed.
The recently released RBI First Quarter Review of Monetary Policy 2009-10 and the accompanying 'Macroeconomic and Monetary Developments First quarter review 2009-10 have indicated that on the basis of Balance of Payments (BoP) the export growth for 08-09 has declined by over 22% to 5.4% and also the import growth has declined by over 21% during the same period.
'I will not be surprised if there is a 7 per cent handle in front of the decimal place for the full financial year.'
According to report by Dun and Bradstreet, central bank expected to maintain status quo on policy rate.
Amidst bankers and industry crying foul over RBI's move to squeeze liquidity, Reserve Bank Governor D Subbarao on Friday met Finance Minister P Chidambaram ahead of first quarter policy review next week.
Calls for decisive fiscal policy action to revive growth
The Reserve Bank is unlikely to cut the benchmark interest rate in its forthcoming bi-monthly monetary policy review later in the week as retail inflation is still a cause of concern, and there is a possibility of the Middle East crisis deteriorating further, impacting crude oil and commodity prices, say experts.
Deputy Governor Michael Patra warned about the spillover effects of food inflation.
Select bankers will meet RBI Deputy Governor Subir Gokarn, who is in-charge of the monetary policy department, and other central bank officials on July 12.
The Reserve Bank's rate-setting panel began its three-day deliberations on Monday to decide the next monetary policy amid expectations that the central bank will maintain status quo on the benchmark interest rate in the backdrop of global scare due to the new coronavirus variant Omicron. Reserve Bank Governor Shaktikanta Das headed six-member Monetary Policy Committee (MPC) is scheduled to announce the policy resolution on Wednesday. If the RBI maintains status quo in policy rates on Wednesday, it would be the ninth consecutive time since the rate remains unchanged.
Sanjay Malhotra takes charge as the 26th RBI governor at a time when headline retail inflation has shot up to 6.2%.
Flush liquidity, apart from softening short-term money market rates, poses inflationary risks.
To consider revising interest rates after RBI's review.
The RBI under former governor Shaktikanta Das resisted pressures to cut interest rates through 2024 as it kept its 'Arjuna's eye' trained on inflation, but the central bank under a new detail-oriented head will soon have to take a call if it can continue sacrificing growth. Das, a career bureaucrat who in 2016 oversaw Prime Minister Narendra Modi's highly disruptive demonetisation move, left a lasting legacy as he demitted office towards the end of 2024 after expertly navigating monetary policy for six years, the highlight of which was steering India's recovery through the pandemic.
The Reserve Bank of India on Tuesday left all the key interest rates unchanged in the first quarterly review of the monetary policy.
The International Monetary Fund (IMF) has said its executive board granted $1 billion in assistance to Pakistan this month after finding out that the country met all conditions and targets for it.
Facing criticism from the government over the central bank prioritising inflation over growth, the new RBI Governor Sanjay Malhotra on Monday said that prospects of the Indian economy are expected to improve on the back of high consumer and business confidence in 2025. "As we strive to preserve financial stability to support a higher growth path for the Indian economy, our focus remains steadfast on maintaining stability of financial institutions and, more broadly, systemic stability," Malhotra said in foreword to the Financial Stability Report.
Bankers and other stakeholders are now almost certain that the Reserve Bank of India (RBI) will increase the key policy rate, or the repo rate, by 25 basis points (bps) on Tuesday.
Rapid depreciation of the rupee put us in a vicious spiral: D Subbarao
Chidambaram would be meeting the bankers for the first time after the quarterly review of monetary policy by Reserve Bank on July 29. The apex bank raised the key policy rate to 9 per cent following which most of the PSU banks including the largest lender SBI hiked their lending rates by 50-100 basis points.
To first take a position that the currency would be managed, and then to witness it fall, is a grave loss of credibility for any government, and for any central bank.
The Reserve Bank of India, in its first-quarter review of monetary policy, kept the benchmark policy rate constant at 8 per cent.
Subir Gokarn says credit-deposit growth mismatch for a longer period could put pressure on liquidity.
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