The Reserve Bank of India's rate-setting panel on Wednesday started discussions to firm up the next bi-monthly monetary policy amid expectations that it might retain status quo on interest rate but change its monetary policy stance amid rising inflation on account of geopolitical developments.
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RBI is scheduled to announce monetary policy on Tuesday.
In its Fifth Bi-monthly Monetary Policy Statement, 2017-18, RBI said the second quarter growth was lower than the one that was projected in the October review, and the recent increase in oil prices may have a negative impact on margins of firms and Gross Value Added (GVA) growth.
The American brokerage firm said it expects the rate cut to happen only in December if the monsoons normalise to cool down inflation or early 2015 in case prices rise prolongs.
Pressure has been mounting on the Reserve Bank of India to cut interest rates in the wake of declining retail inflation and the need to fuel growth momentum. However, the RBI will have to do a tightrope walk as globally interest rates are inching upwards.
The year 2015 is likely to see lower rates to support growth and the Reserve Bank is expected to cut key policy rates by 0.25 per cent in February's monetary policy review meet, says a Bank of America Merrill Lynch report.
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.
RBI Governor Shaktikanta Das kept the red flag on cryptocurrencies flying, warning that the next financial crisis can be triggered by private cryptocurrencies if such speculative instruments are allowed to grow.
Banks seems to be upset over RBI's move over rate cut.
The Reserve Bank of India (RBI) is expected to hold its policy interest rate at 6.75 per cent next week to stifle inflation.
With retail inflation witnessing significant uptick in May, the Reserve Bank of India (RBI) is likely to maintain status quo in its August monetary policy review, according to a report. According to the SBI's research report- Ecowrap, inflation may remain elevated in the coming months due to several global and domestic factors. "We expect a status-quo in August. We believe RBI would still try to find a marriage of convenience of regulatory and developmental measures and monetary policy in August policy," the research report said on Wednesday.
Foreign portfolio investors' (FPIs') net investments in the domestic debt market surged in December, marking a 77-month high, that is, since July 2017. According to market participants, this significant uptick in FPI inflows can be attributed to the post-domestic policy outcome and the US Federal Reserve's dovish stance at the December policy. FPI inflows into debt stood at Rs 18,393 crore in December against Rs 14,106 crore in November, according to data on the National Securities Depository Limited.
The RBI cut rates for third time in 2015 due to favourable economic conditions.
Hawkish tone likely to guard rupee from further slide
In policy review meet in June, RBI Governor Raghuram Rajan kept interest rates intact.
Global trends, macroeconomic data, and the outcome of the US Fed policy meeting are the major factors that will drive the movement in the domestic equity markets this week, analysts said. "In the upcoming data-centric week, the focus will be on crucial releases, including inflation data from India and the US. "Indian inflation is expected to rise, while US inflation will remain steady.
Banks led the decline with Nifty Bank and BSE Bank index dropping over 3% each.
Describing RBI policy as not surprising, State Bank of India Managing Director and Chief Financial Officer Diwakar Gupta said there is room for the central bank to look at the long-term and not too much on the short-term issues like rupee fall and the CAD.
But this might not be the best time to enter these, as probability of further reductions in near future is low
With no rate cuts on the table, the other monetary policy alternative could be to reduce the width of the asymmetric policy corridor or increase in reverse repo rate when the pandemic subsides, they opined.
The Reserve Bank of India (RBI) cut its key repo rate by a bigger-than-expected 50 basis points.
A cut in rates would have encouraged the banks to lend aggressively on the retail front.
However, some experts also feel that there is a case for front-loading of interest rate cut to give a push to the economy
Inflation to peak in the current quarter within tolerance band, moderating in the second half of next fiscal, says central bank.
RBI wants the lending rates to be determined by the market.
A bit of good news is that it has already mopped up $19 billion in forwards in May.
Gaurav Garg, head of research at CapitalVia Global Research Limited will answer your stock market queries.
RBI also retained its GDP growth forecast at 7.6 per cent
The RBI had been widely expected to lift its repo rate by 25 basis points, but instead opted to keep the country's main lending rate at 7.75 per cent.
Vegetable rates may ease from September, led by tomato prices, which have started showing signs of correction on the back of increased supply, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Wednesday. "Looking ahead, the spike in vegetable prices in July is starting to see a correction, led by tomato prices. "New arrivals of tomatoes in mandis are already softening the prices, coupled with proactive supply management in the case of onions.
India's prices are rising faster than many of its emerging market peers. The country's inflation print for May at 4.25 per cent is a marked reduction from the levels seen in May 2022 (7.04 per cent). However, even though the inflation rate remains within the Reserve Bank of India's medium-term target of 4 per cent, with a 2 per cent margin on either side, it continues to be higher than China, Russia, and Brazil.
'One way of doing this could be offering credit guarantee to the banks, say 10 per cent, for fresh loans given to micro, small and medium enterprises,' observes Tamal Bandyopadhyay.
The Reserve Bank of India is likely to cut policy rates by 0.25 per cent and keep the cash reserve ratio unchanged at its policy review next week, on the back of slower-than-expected growth and more encouraging inflation readings, says a report by HSBC.
Uncertainty is emerging as the only certainty, said RBI Governor Shaktikanta Das as he emphasised on continued policy support at the December MPC meet during which members expressed concerns over spread of the Omicron variant of coronavirus, as per the minutes of the rate-setting panel released on Wednesday. After three days of deliberations, the six members of the Monetary Policy Committee (MPC) on December 8 unanimously voted for status quo on policy rates for the ninth consecutive time. At the meeting, the RBI Governor said risks stalking the global economy have amplified with rapid spread of the virus mutations, including the Omicron variant, leading to countries scrambling for restrictions.
FPIs, which are holding large exposures in Indian debt, could also be expected to book some capital gains as yields slide down
Foreign brokerage Bank of America Merrill Lynch (BofAML) on Friday said a "dovish" Reserve Bank will slash key interest rates by 0.25 per cent at the February review meet and will do cuts of 0.75 per cent in 2015.
In a surprise move, the Reserve Bank on Wednesday left the repo rate unchanged at 7.75 per cent, while the cash reserve ratio too is retained at 4 per cent.
Financials ended mixed despite the status-quo on key rates by the RBI. SBI, ICICI Bank and Axis Bank ended up 0.4-2.5% each.
Consumer food price inflation eased to 6.14%.
One of India's main export destinations, the euro zone, is struggling to revive its economy and battling disinflation.
