How should you, as a consumer, be prepared for a rate cut, if any? Read on to find out more.
'We do not believe in fire sale. We don't do it.'
The RBI is scheduled to review its short-term lending rates on Tuesday, amidst apprehensions that it may not go in for interest rate cut even as the pause on the hikes may continue.
The banking regulator is scheduled to come out with its monetary policy for FY 09 on April 29. "We will wait for the (RBI's) policy statement before taking any decision on our interest rates," ICICI Bank Managing Director & CEO K V Kamath told reporters on the sidelines of an Indian Merchants Chamber-organised press conference in Mumbai on Thursday. Interest rate decisions would also be influenced by prevailing market conditions, Kamath said.
Some say the MPC will raise the rate, while others are of the view that there is already de facto interest rate tightening through rising bond yields, which might prompt the central bank to go for a pause.
LIC Housing Finance on Thursday slashed interest rates for new housing loan customers, intensifying the war for cornering a major pie of the now reviving home loan market.
Real estate developers said on Tuesday that RBI's decision to cut cash reserve ratio will help improve the liquidity position of various sectors, including realty, but felt that interest rates should be brought down to boost housing demand.
Reserve Bank will hold its first bi-monthly monetary policy review for 2016-17 on Tuesday.
The government should lower the interest rates in the long term to increase supply as a move to check inflation, which touched a three year high of 7 per cent last week, Bharti Group chairman and managing director Sunil Bharti Mittal said.
'The barbell strategy says that the best way to strike a balance between risk and reward is to invest at the extremes of the risk spectrum.'
Pointing out that inflation rate is a little beyond comfort zone, the Prime Minister's Economic Advisory Council said the current situation is not favourable for a cut in interest rates. The inflation rate stood at 5.11 per cent for the week ended March 1. For the second week in a row that the rate was over 5%. The RBI aims to limit average rate of inflation for the current fiscal at 5 per cent. When the inflation rate is rising, it is always critical to bring down the rates.
The CPI and WPI data for December 2013 holds the key for the third-quarter monetary policy review to be announced later this month.
IDBI Bank has hiked interest rate by 0.25 per cent on fixed deposits having maturity of 365 days and above, effective from Monday.
While bankers and experts expect the lending rate to fall by about one percentage point in the near-term, the Prime Minister's Economic Advisory Council has strongly pitched for rate cut by the RBI in its monetary policy review later in the month.
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.
Initially, these futures contracts would be based on 10-year government bond yield, which should be settled by physical delivery. Recently, an RBI-appointed technical panel recommended introduction of futures contracts, suggesting that as market evolves, exchanges may consider introducing contracts on various other government securities and had sought public comments.
The rupee has depreciated by 0.6 per cent so far in the current financial year.
The EPF Board on Saturday once again deferred decision on the contentious issue of interest rate for its four crore subscribers till the next meeting to facilitate more consultations between the Labour and Finance ministries.
Most members of the Reserve Bank of India's monetary policy committee (MPC) decided to stick to the course on bringing retail inflation to the target of 4 per cent while voting for maintaining status quo in the April review, except external member Jayanth Varma who voted for a 25 bps cut in the repo rate. "I believe that the extant monetary policy setting is well positioned," RBI governor Shaktikanta Das said in the minutes of the policy review, which came out on Friday. "Monetary policy transmission is continuing and inflation expectations of households are also getting further anchored.
Tactical investors should have an investment horizon of around six months to one year, long-term investors should stick around for 10 years or more.
All policy planners want low interest rate, says Jaitley
High inflationary expectations may lead to higher interest rates by end-FY10.
Equity benchmark indices Sensex and Nifty hit their fresh record levels on Thursday after lower inflation numbers raised hopes of an interest rate cut by the RBI. Besides, heavy buying in capital goods, consumer durable and industrial stocks also helped the indices, traders said. Retail inflation continued its downward slide to reach a one-year low of 4.75 per cent in May due to a marginal decline of prices in the food basket and remained within the Reserve Bank's comfort zone of below 6 per cent, according to government data released on Wednesday.
Commercial banks have turned cautious in lending to smaller microfinance institutions (MFIs), which has compelled the latter to borrow from non-banking financial companies (NBFCs) at much higher rates. Recently Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao slammed micro lenders for increasing their margins "disproportionately" and said these lenders were quick to pass on the increased cost to the borrowers but reluctant to pass on the benefits under the new regime, where margins are not capped.
BSE will become the fourth player in currency derivatives in India
State Bank of India chairman Dinesh Kumar Khara has pitched for tax relief on interest income, saying it would help banks to garner savings that could be used for funding long-term infra projects. Currently, banks are required to deduct tax when interest income from deposits held in all the bank branches put together is more than Rs 40,000 in a year. With regard to savings accounts, interest earned up to Rs 10,000 is exempt from tax.
The Reserve Bank of India's (RBI) new rules for credit and debit cards came into effect from October 1. These include tokenisation, one-time password (OTP) for activation after 30 days, written permission for enhancement of credit limit, and greater clarity on interest calculation.
RBI, in its first bi-monthly monetary policy statement, left the short-term lending rate, or repo rate, unchanged at 8 per cent and the cash reserve ratio static at 4 per cent.
'The real repo rate is very high in terms of core inflation.'
To find out how and why changes in interest rates impact fixed income investments, read on . . .
In his book, former governor Subbarao says Chidambaram, Pranab were piqued by his tight rate policy.
The RBI on Wednesday banned zero per cent interest rate scheme for purchase of consumer goods, a move intended to protect customers but may dampen the festive spirit.
Banks have not cut rates yet as March is typically a busy season.
Finance Ministry and Reserve Bank of India on Thursday sought to play down their differences in perception on interest rates.
Bankers on Tuesday said interest rates have bottomed out in the second quarter and rates may start rising in the coming months in line with a pick-up in credit off take, expected on the back of a revival in the economy.
IT and interest rate-sensitive bank, realty, and auto stocks ended with sharp gains.
The Reserve Bank of India (RBI) kept its key policy repo rate unchanged at 8.0 percent on Tuesday, as widely expected, while expressing concerns about risks to its target to bring consumer inflation down to 6 percent by January 2016.
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