The International Monetary Fund (IMF) has reduced India's growth forecast for FY27 to 6.4 per cent, citing the potential impact of higher energy prices offsetting the country's economic resilience. Despite this, India remains among the fastest-growing major economies.
Subbarao's decision to keep interest rate unchanged at the policy review last month to contain inflation evoked criticism from industry and the government.
Shrugging off concerns over the depreciation of rupee, the RBI has cut interest rate by 25 basis points to 5.25 per cent in a bid to further bolster economic growth, which rose to a six-quarter high of 8.2 per cent in the second quarter of the current financial year.
India's banking system is grappling with a persistent liquidity surplus exceeding Rs 5 trillion, driven by significant government spending and bond redemptions, leading market participants to anticipate the Reserve Bank of India will step up Variable Rate Reserve Repo operations to manage the excess funds.
Since February 2025, the RBI has reduced the policy rate by 100 basis points. In its previous policy review in June, it had trimmed the repo rate by 50 basis points to 5.5 per cent.
India's economy registered a robust 7.7 per cent growth in the fiscal year 2025-26, an increase from 7.1 per cent in the previous year, with the January-March quarter alone seeing a 7.8 per cent expansion.
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.
The Reserve Bank of India's proposal to allow non-banking financial companies (NBFCs) access to the term money market is projected to significantly increase market volumes by 40-60 per cent in the first year, potentially doubling turnover within two to three years, according to treasury executives.
RBI said more monetary transmission to support growth continues to be critical.
Analysts predict that developments in West Asia, their impact on crude oil prices, and the trading activity of foreign institutional investors (FIIs) will be crucial factors influencing the Indian stock market this week.
India's wholesale price inflation (WPI) increased to 9.87 per cent in June, up from 9.68 per cent in May, primarily due to significant price increases in non-food and food products, with food inflation alone rising to 5.49 per cent.
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.
The Reserve Bank of India is unlikely to change the policy rates the repo and reverse repo rates in its mid-term review of the monetary policy amid persistent inflationary expectations following copious foreign capital inflows. Headline inflation has dropped significantly below RBI's target of 5 per cent for 2007-08 but this is a result of the government deciding not to pass on the increase in oil prices to consumers.
A foreign brokerage warns that sustained crude oil prices above USD 100 per barrel could push India's inflation above the RBI's tolerance level, potentially triggering interest rate hikes.
It's not the high interest rates that's affecting the economy but the policy bottlenecks.
After effecting two back-to-back 25 basis points rate cuts, Reserve Bank Governor Sanjay Malhotra on Wednesday hinted at another reduction in key policy rate by changing the central bank's monetary stance to 'accomodative' from 'neutral', which may further lower EMIs for consumers.
'If it doesn't, it will continue with measures to infuse liquidity, signalling a new cycle,' predicts Tamal Bandyopadhyay.
At the same time, banking sources close to the development said the central bank could raise its growth target from 5-6 per cent to 6.5 per cent to accommodate the impact of an improving monsoon and the growth impetus provided through various fiscal and monetary stimulus packages earlier in the year. The cautious outlook on interest rates is primarily to accommodate rising inflationary expectations in the economy.
High inflation continues to be an obstacle in lowering policy rates as of now.
Prime Minister's Economic Advisory Council Chairman C Rangarajan on Tuesday called RBI's policy action a "wise decision". The liquidity easing measures will have an impact on interest rates, he said.
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.
Among the Sensex constituents, 18 stocks closed in negative with UltraTech Cement, L&T, Bharti Airtel, Bajaj Finance and Tech Mahindra being major laggards. Other heavyweights like Asian Paints, Maruti, Titan and JSW Steel also saw heavy selling. In contrast, Kotak Mahindra Bank, Bajaj Finserve, HDFC Bank, ITC and SBI bucked the trend and ended the session with a gain of up to 2.09 per cent.
...exceeding their 49,340 crore equity selloff.
The broader NSE Nifty too slipped by 9.50 points, or 0.09 per cent, to end at 10,118.25
'At the end of the day, it is just another technology produced by the human mind.'
The Reserve Bank of India (RBI) has projected that crude oil prices will average USD 85 per barrel and the rupee will weaken to 94 against the dollar by FY27, according to its bi-annual Monetary Policy report.
FM says government policies aim to contain inflation, spur growth.
From the Sensex firms, State Bank of India, Bajaj Finserv, Bajaj Finance, Maruti, HCL Tech, Larsen & Toubro, Mahindra & Mahindra and Infosys were among the major winners. However, Hindustan Unilever, Eternal, Tata Motors Passenger Vehicles, and Sun Pharma were among the laggards.
The Reserve Bank has kept the key policy rates unchanged in its Mid-Quarter Monetary Policy Review.
Shrugging off concerns over the depreciation of rupee, the RBI has cut interest rate by 25 basis points to 5.25 per cent in a bid to further bolster economic growth, which rose to a six-quarter high of 8.2 per cent in the second quarter of the current financial year.
Bank lending to companies is expected to go up in the coming quarters because the difference in interest rates between corporate bonds and bank loans has narrowed. In addition, recent policy reforms by the Reserve Bank of India (RBI), including allowing domestic banks to do acquisition financing, are expected to give further support to corporate lending, analysts said.
The association demanded that the interest rates for developers as well as home buyers should be brought down to boost realty sector, which is facing a slowdown in demand.
Real estate biggies unhappy with status quo on RBI rate cut.
An Home Loan Protection Plan repays the outstanding loan if the borrower dies or suffers a covered disability.
Ernst & Young India on Tuesday said that despite the steep fall in headline inflation in August, the Reserve Bank is likely to persist with monetary tightening measures by hiking key policy rates by at least 25 basis points at its mid-quarter review on Thursday.
Stock market analysts on Tuesday termed the RBI decision to hike policy rates by 0.25 per cent as in line with expectations and said they expect another hike in March review of the monetary policy.
Reserve Bank will "wait and watch" the evolving situation before deciding on any further rate cut, Governor Sanjay Malhotra has said as he emphasised that both growth and price stability are equally important. With inflation on a downward trend, the RBI's Monetary Policy Committee (MPC) has been reducing the benchmark repo rate and has adopted a neutral stance, which also gives the flexibility to either cut or hike the rate going forward. The central bank has cummulatively reduced the repo rate by 100 basis points since February.
Govt likely to get full control on policy rate.
The Reserve Bank of India (RBI), is in charge of monetary policy which has a big impact on liquidity and interest rates in the financial system. Let's look at some of the basics of monetary policy and how it impacts the average investor.
