Main target will be growth, not prices; RBI rate cuts unlikely soon: Economists
Reserve Bank of India
is unlikely to cut the policy
repo rate
further from 5.5% now.
"We believe that growth would guide the RBI's thought process as inflation remains benign. We do not see any further cuts in our base case," Rahul Bajoria and Smriti Mehra, economists at
BofA Securities
India, wrote in a report.
Inflation as measured by consumer price index fell to 1.55% in July-the lowest since June 2017 and well below the central bank's inflation target range of 2-6%, data released on Tuesday showed. The RBI's monetary policy committee (MPC) has reduced the repo rate by 100 bps since February, but left it unchanged at 5.5% last week. The MPC's next decision will be announced on October 1.
The central bank reduced CPI forecast for the current financial year by 60 basis points but retained
GDP growth forecast
at 6.5%.
Economists said there would be a rate cut only if the 50% US tariffs on India significantly impact growth.
"Given the inflation outlook, the RBI has room to cut rates further by 25-50 bps in case there is evidence that growth is slowing down significantly due to tariff shocks," said Sakshi Gupta, principal economist at
HDFC Bank
. "For now, we do not expect further rate cuts."
HDFC Bank has retained the GDP growth estimate at 6.3% due to likely offsetting factors and on the possibility that the US tariffs could be negotiated down, she said.
Sameer Narang, head, economic research group at
ICICI Bank
, does not see any rate cut from RBI if growth remains sustainably above 6%. "As of now, we foresee growth at 6.3% which also does not call for any more rate cuts. However, if downside risks to growth are visible because of external headwinds, then easing may again be on the table," he said.
Economists said the June quarter GDP data, due for release on August 29, will be keenly watched for cues on the RBI's rate action. However, this data will not include the impact of tariffs as the US duties came into effect this month. Even as the consensus view is inclined towards 5.5% as the terminal repo rate, a few economists expect further reduction.
Economists at HSBC India believe that if some of the weak high frequency data from June continue, the RBI can mark down its growth forecast and deliver a 25 basis point rate cut in the fourth quarter of 2025, taking the repo rate to 5.25%.
Nomura sees 5.00% as the terminal rate as it expects 25 bps cut each in October and December policy meetings. "The MPC's data-dependent approach has left the door open to future cuts, even if it did not explicitly signal one," it said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
18 minutes ago
- Economic Times
If Mahatma Gandhi wasn't India's first choice for banknotes then how did he become Rupee's forever face?
Synopsis Initially rejected, Mahatma Gandhi's image wasn't always destined for Indian currency. Post-independence, the Lion Capital of Ashoka was favored, symbolizing the new republic. Gandhi's presence began with a 1969 commemorative note, becoming permanent in 1996. Despite debates and proposals for other figures, Gandhi remains a constant reminder of India's core values on every rupee. Mahatma Gandhi Walk into any shop in India, hand over a crumpled banknote, and you'll see a familiar face smiling back, bespectacled, serene, and instantly recognisable. Mahatma Gandhi doesn't just appear on our currency; he has become a quiet constant in our daily exchanges, silently passing through millions of hands each day. But the story of how he ended up there is far from straightforward. In fact, in the first flush of independence, Gandhi's portrait was rejected for Indian on 14 August 1947 brought independence, but not yet a new currency. For a brief period, the Reserve Bank of India (RBI) continued issuing colonial notes bearing King George VI. Behind closed doors, discussions began on what a truly Indian banknote should look like. The early idea was simple, replace the King's portrait with that of the Father of the Nation. Designs were prepared with Gandhi's image. Then came a surprising turn. As the RBI recounts, the 'final analysis' shifted towards a non-personal symbol, the Lion Capital of Ashoka at Sarnath. It was felt this emblem, drawn from India's ancient heritage, better captured the idea of a modern republic. So, in 1949, the new Re. 1 note appeared with the Lion Capital watermark, and Gandhi's portrait was the following decades, Indian notes became miniature showcases of the country's identity and ambitions. Tigers, deer, and peacocks symbolised natural heritage. The Konark Wheel, Brihadeeswara Temple, and Hirakud Dam spoke of cultural pride and industrial progress. The Aryabhatta satellite hinted at a future in science and space. Currency in the 1950s and 60s was not about a single leader, it was about the nation as a wasn't until Gandhi's birth centenary in 1969 that he made his first official appearance on a banknote. This commemorative design showed him seated, with Sevagram Ashram in the background, a gentle nod to his life of simplicity and service. The issue was special and short-lived, not yet a permanent feature of Indian currency. The real turning point came in 1987. The Rajiv Gandhi government reintroduced the Rs 500 denomination, and for the first time on a regular note, Gandhi's portrait appeared on its obverse. Still, he wasn't on every note. That came in 1996, when the RBI launched the Mahatma Gandhi Series, redesigned notes with improved security features and, for the first time, Gandhi's smiling face on all 2016, the 'New Series' kept Gandhi firmly in place while refreshing colours, sizes, and themes. From Rs 10 to Rs 2,000, he had become inseparable from the the years, there have been calls to share this space. Some have suggested Jawaharlal Nehru, Subhas Chandra Bose, Sardar Patel, or even religious figures like Goddess Lakshmi and Lord Ganesha. In 2016, the government clarified that a high-level committee had decided 'there is no need to change Mahatma Gandhi's photo on the currency notes.' Others have been honoured in different ways, Dr B. R. Ambedkar, for instance, was commemorated with special Rs 125 and Rs 10 coins. In 2022, a proposal from the Aam Aadmi Party to add Lakshmi and Ganesha sparked debate, with supporters citing prosperity and detractors warning against politicising or communalising currency design. For all the discussion, Gandhi remains unshaken on our notes. As Martin Luther King Jr. once said, 'Gandhi was inevitable… we may ignore him at our own risk.' On the rupee, his presence is more than decoration, it's a reminder of the values he championed: truth, non-violence, and unity in time we pass a note across a counter, we're not just exchanging money. We're handing over a piece of history, one that almost didn't have Gandhi's face, but now, perhaps fittingly, cannot be imagined without it.
Time of India
an hour ago
- Time of India
ED freezes Rs 110 crore in mule accounts and seizes 1,200 credit cards in Parimatch money laundering probe
Mumbai: The Enforcement Directorate (ED) froze Rs 110 crore in mule accounts and seized 1,200 mule credit cards following raids at 17 locations in Mumbai, Delhi, Noida, Jaipur, Surat, Madurai, Kanpur, and Hyderabad earlier this week. The operations were part of a money laundering investigation connected to the Parimatch online gaming-betting app operated from Cyprus, and conducts its illegal operations in India through multiple verticals. The raid also included a firm whose payment aggregator licence application had recently been rejected by the RBI. The ED stated that Parimatch defrauded investors (its users) by promising high returns and thus generated over Rs 3,000 crore in a year. Investigations revealed that Parimatch routed users' funds through mule accounts using various strategies across southern and western India to layer the money collected from users. The ED said that the app deceived users with attractive prize winnings and aggressive marketing, including sponsorship of sports tournaments and partnerships with well-known celebrities. Parimatch also established Indian entities to run surrogate advertisements under the names "Parimatch Sports" and "Parimatch News. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Find your car's value online in minutes. Spinny Click Here Undo " Payments to these agencies were made through foreign inward remittances, said the ED. You Can Also Check: Mumbai AQI | Weather in Mumbai | Bank Holidays in Mumbai | Public Holidays in Mumbai | Gold Rates Today in Mumbai | Silver Rates Today in Mumbai In one instance during the search, the ED discovered that funds deposited by users into mule accounts were withdrawn in cash in a specific locality in Tamil Nadu. Afterwards that cash was handed over to hawala operators, who used it to recharge virtual wallets of a UK-based company. The wallets were then used to purchase USDT cryptocurrency under the names of mule crypto accounts, operated by Parimatch agents, said the ED. In another instance, during the search found that in western India, Parimatch utilised domestic money transfer (DMT) agents. Funds collected in mule accounts controlled by these DMT agents were sent to Parimatch agents through payments made via mule credit cards. The ED seized 1,200 such mule credit cards from a small shop. The ED investigation also uncovered that payment companies, whose applications for Payment Aggregator licences had been rejected by the RBI, offered their services to Parimatch under the guise of technology service providers (TSPs) and provided their API to facilitate user fund collections. These TSPs supplied the APIs to Parimatch agents, who then opened mule accounts in the names of e-commerce companies and payment solution provider companies to collect funds from users. Money collected through UPI transfers was layered and transferred out as e-commerce refunds, chargebacks, vendor payments, and other transactions, effectively concealing the actual flow and purpose of the funds, said the ED. MSID:: 123306752 413 | Stay updated with the latest local news from your city on Times of India (TOI). Check upcoming bank holidays , public holidays , and current gold rates and silver prices in your area. "Get the latest news updates on Times of India, including reviews of the movie Coolie and War 2 ."
Time of India
an hour ago
- Time of India
If Mahatma Gandhi wasn't India's first choice for banknotes then how did he become Rupee's forever face?
Walk into any shop in India, hand over a crumpled banknote, and you'll see a familiar face smiling back, bespectacled, serene, and instantly recognisable. Mahatma Gandhi doesn't just appear on our currency; he has become a quiet constant in our daily exchanges, silently passing through millions of hands each day. But the story of how he ended up there is far from straightforward. In fact, in the first flush of independence, Gandhi's portrait was rejected for Indian notes. Independence Day 2025 Before Trump, British used tariffs to kill Indian textile Bank of Azad Hind: When Netaji gave India its own currency Swadeshi 2.0: India is no longer just a market, it's a maker Midnight on 14 August 1947 brought independence, but not yet a new currency. For a brief period, the Reserve Bank of India (RBI) continued issuing colonial notes bearing King George VI. Behind closed doors, discussions began on what a truly Indian banknote should look like. The early idea was simple, replace the King's portrait with that of the Father of the Nation. Designs were prepared with Gandhi's image. Then came a surprising turn. As the RBI recounts, the 'final analysis' shifted towards a non-personal symbol, the Lion Capital of Ashoka at Sarnath. It was felt this emblem, drawn from India's ancient heritage, better captured the idea of a modern republic. So, in 1949, the new Re. 1 note appeared with the Lion Capital watermark, and Gandhi's portrait was shelved. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like This Could Be the Best Time to Trade Gold in 5 Years IC Markets Learn More Undo In the following decades, Indian notes became miniature showcases of the country's identity and ambitions. Tigers, deer, and peacocks symbolised natural heritage. The Konark Wheel, Brihadeeswara Temple, and Hirakud Dam spoke of cultural pride and industrial progress. The Aryabhatta satellite hinted at a future in science and space. Currency in the 1950s and 60s was not about a single leader, it was about the nation as a whole. Gandhi's First Appearance (1969) It wasn't until Gandhi's birth centenary in 1969 that he made his first official appearance on a banknote. This commemorative design showed him seated, with Sevagram Ashram in the background, a gentle nod to his life of simplicity and service. The issue was special and short-lived, not yet a permanent feature of Indian currency. Live Events The real turning point came in 1987. The Rajiv Gandhi government reintroduced the Rs 500 denomination, and for the first time on a regular note, Gandhi's portrait appeared on its obverse. Still, he wasn't on every note. That came in 1996, when the RBI launched the Mahatma Gandhi Series, redesigned notes with improved security features and, for the first time, Gandhi's smiling face on all denominations. In 2016, the 'New Series' kept Gandhi firmly in place while refreshing colours, sizes, and themes. From Rs 10 to Rs 2,000, he had become inseparable from the rupee. Other Faces, Other Ideas Over the years, there have been calls to share this space. Some have suggested Jawaharlal Nehru, Subhas Chandra Bose, Sardar Patel, or even religious figures like Goddess Lakshmi and Lord Ganesha. In 2016, the government clarified that a high-level committee had decided 'there is no need to change Mahatma Gandhi's photo on the currency notes.' Others have been honoured in different ways, Dr B. R. Ambedkar, for instance, was commemorated with special Rs 125 and Rs 10 coins. In 2022, a proposal from the Aam Aadmi Party to add Lakshmi and Ganesha sparked debate, with supporters citing prosperity and detractors warning against politicising or communalising currency design. The Inescapable Mahatma For all the discussion, Gandhi remains unshaken on our notes. As Martin Luther King Jr. once said, 'Gandhi was inevitable… we may ignore him at our own risk.' On the rupee, his presence is more than decoration, it's a reminder of the values he championed: truth, non-violence, and unity in diversity. Every time we pass a note across a counter, we're not just exchanging money. We're handing over a piece of history, one that almost didn't have Gandhi's face, but now, perhaps fittingly, cannot be imagined without it.
