Shaktikanta Das is a master of the finest balancing act who listens to all but takes his own decisions, discovers Tamal Bandyopadhyay.
The country's economic growth slipped to a decade-low of 4.5 per cent in 2012-13 and is estimated at 4.9 per cent in the current financial year.
With inflation hovering much above the comfort zone, the Reserve Bank of India may raise key policy rates by 25 basis points in its first mid-quarterly review of the credit policy for financial year 2012 on Thursday.
India's economic growth is expected to be lower at 6.3 per cent this fiscal compared to the RBI's projection of 6.5 per cent, a SBI Research Report said on Thursday. The report pegged the first quarter GDP estimate at around 6.8-7 per cent, mainly due to muted private capex.
The Reserve Bank on Friday retained GDP growth forecast of 7 per cent for 2024-25 financial year, lower than the 7.6 per cent expansion estimated for FY24. In its February monetary policy, the RBI had projected the GDP growth rate of 7 per cent for the financial year beginning April 1. Announcing the current fiscal's first bi-monthly monetary policy, RBI Governor Shaktikanta Das said the rural demand is gathering pace, and sustained growth in manufacturing sector should boost private investment.
The Reserve Bank of India cut its repo rate by 25 basis points to 6.50 per cent.
Meanwhile, Minister of State for Finance Namo Narain Meena, in a written reply to the Lok Sabha, said, "In the forward guidance of the second quarter review of the Monetary
While the rate increase was beyond Street expectations, it would put further pressure on demand and profitability of firms in rate-sensitive segments.
According to HSBC, the RBI will keep the policy rate on hold next week, although it is likely to cut the CRR by 0.25 per cent to address the lingering liquidity tightness.
Analysts feel the RBI should not opt for another hike in the calendar year.
If providing a stimulus to growth is the objective now, that would be best served by moving rates as quickly as possible to the bottom.
Minutes of the MPC meeting show Das felt economy needs more monetary stimulus as inflation outlook remains uncertain.
RBI may go for a 25-basis point cut at its February policy meet.
"We welcome the decision. This will provide adequate impetus to banks to lower their interest rates. Private banks will sooner or later will follow suit," Economic Affairs Secretary Ashok Chawla told reporters in New Delhi on Thursday. On Wednesday, the RBI cut short-term lending and borrowing rates -- Repo and Reverse Repo -- by 50 basis points each, while keeping the other key tool -- Cash Reserve Ratio -- intact.
'We will be very, very proactive in providing whatever liquidity requirements are needed.'
An immediate RBI rate cut will lower lending rates for banks' MSME/retail/mortgage loans before the 'busy' industrial season ends in March.
The policy will be presented in the backdrop of rising inflation.
It maintained, however, that RBI's lending (repo) and borrowing (reverse repo) rates to banks will rise by 75 basis points (0.75 per cent) in 2010, in view of rising prices coupled with the surge in industrial production.
If you are one among the millions of existing borrowers who are paying a higher interest rate compared to new borrowers of the same bank, make your shift now, before prepayment charges make it more expensive.
Instead of a rate hike, or even a pause, there could be a window for the RBI for an interest rate cut
The Reserve Bank of India (RBI) will stay away from changing key rates - including the reverse repo rate - this fiscal in the backdrop of Omicron. However, it will continue to shape the rate movements through liquidity market operations. Soumya Kanti Ghosh, group chief economic advisor, State Bank of India, said whether Omicron surge or not, there is not going to be any hike this year. However, the central bank may continue to shape rates through market operations.
Inflation, as measured by the Wholesale Price Index, stood at 8.66 per cent in April.
The RBI has made serious attempts to improve fiscal deficit.
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The Reserve Bank is scheduled to unveil its first quarter review of the monetary policy on July 30.
After growing at 8.4 per cent for consecutive financial years, economic growth fell to 6.5 per cent in 2011-12, primarily owing to a dismal show by the manufacturing sector, as well as a part of the services segment.
The US Fed interest rate decision, domestic inflation data and global trends would be key driving factors in dictating movement in the market this week, as the Lok Sabha elections outcome and the RBI policy decision are behind us, analysts said. The past week was a roller-coaster ride for investors as markets swung sharply in both directions before closing with strong gains.
India Inc expects the RBI to cut interest rates by early next year.
The RBI must cut rates to spur growth, say experts.
Debt fund managers are reassessing their strategies after the setback delivered by the Reserve Bank of India recently. While most are refraining from any knee-jerk reaction to the central bank's surprise open market operation (OMO) announcements, they are taking a re-look at the duration of their schemes. Sandeep Yadav, head of fixed income at DSP Mutual Fund, said it has trimmed the duration of some schemes, considering the hawkish stance by the RBI.
Bankers said high interest rate could make Indian economy sluggish given that inflation is around 5%
Given the various risks to growth, one could argue for rate cuts to be deeper than the 5 per cent terminal repo rate that we are projecting at this stage, says Kaushik Das.
The pace of loan growth among public sector banks (PSBs) has seen a surge in the financial year 2024-25, and this is an exception to the overall moderation in bank credit during FY25. PSU banks' share in incremental credit rose to 57.3 per cent in March from 51.7 per cent a year ago, according to the Reserve Bank of India's (RBI's) Monetary Policy Report (April 2025).
Patra, as executive director of the central bank, was the principal advisor to the Monetary Policy Department since July 2012.
Wholesale price inflation (WPI) declined to a 14-month low of 0.39 per cent in May on easing prices of food articles and fuel, and experts said geopolitical tensions could push up prices.
Despite moderation, food inflation is still high at 9.52 per cent on account of rising prices of essential items.
The Reserve Bank of India is highly concerned with soaring inflation and the crushing impact of the weight of rising prices of food items and other essential commodities on the common man.
The Reserve Bank may cut key interest rates as early as this week.
Of the eight RBI governors who have held office since the 1991 economic liberalisation, Bimal Jalan had the longest stint and S Venkitaramanan, the shortest. Current Governor Shaktikanta Das will overtake Bimal Jalan before completing his second term in December, points out Tamal Bandyopadhyay.
Jio Finance, a wholly owned subsidiary of Jio Financial Services, is likely to delay its maiden bond issue of Rs 3,000 crore, originally scheduled for this month. The decision comes amid expectations of softening yields in April because the Reserve Bank of India's (RBI's) monetary policy committee (MPC) is widely expected to cut the policy repo rate by another 25 basis points, sources said.
In the last policy review in December, RBI had decided to keep policy rate unchanged.
