Retail inflation crossed the RBI's comfort level and rose to 5.21 per cent in December on increase in prices of food items.
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.
The central bank held the cash reserve ratio at 4 per cent.
Fitch Solutions sees RBI keeping benchmark interest rates unchanged during the fiscal to March 2022 following its decision to buy Rs 1 lakh crore of government bonds. "We had initially expected another policy rate cut to arrest the rise in government bond yields since the Union Budget announcement in February. "However, having an explicit bond purchase guidance from the RBI following the announcement of the G-SAP will also achieve a similar effect, if not even be more effective than a rate cut on capping the increase in bond yields," it said in a note. The Reserve Bank of India (RBI) held its policy repurchase (repo) rate unchanged at 4 per cent at its monetary policy meeting on April 7.
Lending rates in certain segments may be increased; fixed depositors may lock into existing rates.
Das said banks have passed only 0.29 per cent in rate cuts to their borrowers as against 0.75 per cent cuts in interest rates by the Reserve Bank till June.
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Bankers remained ambivalent on the impact of Tuesday's policy announcement by Reserve Bank on the cost of funds and refrained from giving a guidance on the direction in which lending rates are headed.
The RBI on Tuesday maintained status quo on interest rates, saying there have been no developments to warrant further easing since an unscheduled rate cut about a fortnight ago.
By taking the mutual fund route, investors can take exposure to gilts with small amounts. Over a decade or more, returns from these funds tend to be sound.
Equity benchmark Nifty scaled the psychological milestone of 21,000 in afternoon trade on Friday, and the Sensex touched its all-time intraday high of 69,888.33 after the central bank's decision to keep policy rates unchanged in line with market expectations. The 50-share benchmark index opened on a bullish note, after taking a breather on Thursday, and rose to 21,006.10. As many as 25 stocks were trading in the green, and 24 stocks defied the broader market and were trading in the negative territory.
Shifting to floating rate deposits can work as an anaesthetic gel for some customers, points out Tamal Bandyopadhyay.
The Reserve Bank of India (RBI) on Monday realigned the bank rate to marginal standing facility (MSF) rate in one-time technical adjustment. The bank rate now stands at 9.5 per cent as against six per cent earlier.
Some see CRR cut as tight liquidity continues.
RBI may wait for a substantial downtrend and maintain repo at the current level in its third-quarter review.
They feel reducing policy rates will help to boost production and revive the economy.
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.
RBI has cut the rates thrice so far in 2015 by 25 bps each.
In a bid to support revival of sectors hit most by the Covid-19 pandemic, Reserve Bank of India on Friday decided to open a separate liquidity window of Rs 15,000 crore for certain contact-intensive sectors like hotels and restaurants, tourism and aviation ancillary services.
Real estate companies expressed disappointment over the RBI's decision to hike the short-term lending rate, saying this could hurt economic growth and adversely impact property demand in the ongoing festival season.
January inflation may undershoot RBI's 6% target.
Consensus among members at April policy meet that rupee be allowed to depreciate
With RBI rate cut, loans are likely to be cheaper.
"The Monetary Policy Committee recognises that there is monetary policy space for future action. However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture," the RBI said in its fifth bi-monthly monetary policy for this fiscal.
Ignoring the rate cut demand of India Inc, RBI in its first quarter monetary policy review kept the short-term lending (repo) rate, at which banks borrow from RBI, unchanged at 8 per cent.
'Once the lockdown is lifted, we will see some pickup in demand.' 'And my sense is that it will be a long walk this time given that we have lost three months of economic activity.'
The Reserve Bank of India on Tuesday left all the key interest rates unchanged in the first quarterly review of the monetary policy.
Among the Sensex firms, ITC, Kotak Mahindra Bank, ICICI Bank, Nestle, Axis Bank, IndusInd Bank, UltraTech Cement, Bajaj Finance, Maruti and HDFC Bank were the major laggards.
RBI sees marginal improvement in economic growth to 5-6%.
The banking industry is hoping for more rate cuts by the Reserve Bank, which in turn, will help soften both deposit and lending rates, a top financial industry expert said.
It believes that RBI will continue with liquidity infusion through CRR cuts and open market operations. Rate cut may happen only in January
Moody's Investors Service on Friday raised India's growth projection for 2023 calendar year to 6.7 per cent on account of robust economic momentum. "Strong services expansion and capital expenditures propelled India's 7.8 per cent real GDP growth in the second (April-June) quarter from a year ago. "We have accordingly raised our 2023 calendar year growth forecast for India from 5.5 per cent to 6.7 per cent," Moody's said in its Global Macro Outlook. - el nino
It's not the high interest rates that's affecting the economy but the policy bottlenecks.
The Reserve Bank may announce cut in policy rates up to 50 basis points soon as inflation has been on way downward for past three successive weeks, bankers said.
A repo rate hike may hurt growth far more than it will help deal with an inflation rate that is already dropping.
Banks are expecting a 25-basis-point increase in the repo rate (7.75 per cent at present) -- the central bank's short-term lending rate against government securities -- when the Reserve Bank of India announces its monetary policy on April 24.
The stock markets, which had opened in the green on rate cut hopes, tumbled after the monetary policy announcement.
'People know if inflation is not within the tolerance band, then action will be taken so they do not expect inflation to rise above that.'
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