RBI's policy rate cut to boost growth as inflation eases: BoB report
The BoB report added that the RBI's surprise 50 basis-point rate cut, along with a phased 100 basis-point reduction in the Cash Reserve Ratio (CRR), has signalled a strong pro-growth stance.
The announcements have been welcomed by markets and are expected to spur economic activity in the coming quarters.
The Monetary Policy Committee (MPC) maintained its GDP growth forecast for FY26 at 6.5 per cent. The RBI revised the inflation projection downward to 3.7 per cent, highlighting its confidence in the current macroeconomic environment.
On June 6, RBI's Monetary Policy Committee (MPC) reduced the policy repo rate under the Liquidity Adjustment Facility by 50 basis points to 5.5 per cent.
Consequently, the Standing Deposit Facility Rate, which is the SDF Rate, shall stand adjusted to 5.25 per cent, and the Marginal Standing Facility MSF Rate and the Bank Rate shall stand adjusted to 5.75 per cent.
'These measures are expected to boost growth amidst easing price pressures and infuse liquidity along with supporting credit flow,' the report added.
'In the coming week, focus would shift towards the US Fed, wherein a pause is expected, especially since the labour market has been signalling some strength,' the report added.
India's monetary move comes against a backdrop of renewed optimism in the global economy, as the United States and China begin working towards concluding new trade terms.
The report added that global central banks have adopted a watchful stance, closely monitoring the inflation risks with growth.
'Global central banks closely monitored the evolving dynamics between growth and inflation,' the report added.
The European Central Bank (ECB) recently cut rates by 25 basis points.
As per the report, the attention now turns to the US Federal Reserve, which is widely expected to pause its rate changes given recent labour market resilience.
'In the coming week, focus would shift towards the US Fed, wherein a pause is expected, especially since the labour market has been signalling some strength,' the report added. (ANI)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
7 minutes ago
- Economic Times
RBI said to have sold at least $5 billion to boost rupee
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel India's central bank sold US dollars across both onshore and offshore currency markets this month to prop up the rupee as it weakened toward a record low, according to people familiar with the Reserve Bank of India sold at least $5 billion worth of the US currency, one of the people said, asking not to be identified as the information is private. The RBI didn't immediately respond to an email requesting comment on the matter. If the trend persists, it could become RBI's largest month of net dollar sales since rupee fell to 87.89 per dollar last week, just shy of its all-time low as US President Donald Trump doubled tariffs on Indian goods on Aug. 6 to 50% as a penalty for its purchases of Russian oil. A weaker rupee could fuel imported inflation and strain an already fragile economic intervention suggests a potential shift away from the RBI's previously restrained approach under Governor Sanjay Malhotra, who took office in rupee has depreciated more than 2% so far this year, making it among Asia's worst-performing currencies. Roughly half of that drop came in the past two weeks after it became evident Trump was planning to increase the tariffs.'The recent RBI intervention seems to have more to do with their dislike of the volatility in the exchange rate,' said Dhiraj Nim, currency strategist at Australia and New Zealand Banking Group Ltd. The rupee traded steady at 87.62 per dollar on multiple occasions last week, the central bank was seen stepping into the offshore market just before domestic currency trading began at 9 a.m. Mumbai time, according to two of the people familiar with the matter, who declined to be identified as they aren't authorized to speak on on so-called non-deliverable forwards allows the central bank to guide the rupee's trajectory without having to sell large volumes of dollars outright. The central bank heavily relied on this strategy last RBI's latest foreign-exchange reserves data also point to increased intervention, with the stockpile falling by $9.3 billion, the steepest drop since November, to $689 billion in the week through Aug. 1. Part of the decline may reflect valuation changes in global currencies, not solely the central bank's dollar sales or purchases.
News18
17 minutes ago
- News18
Air India to suspend services to Washington, DC from September 1
New Delhi [India], August 11 (ANI): Air India on Monday announced the suspension of its services between Delhi and Washington DC, effective September 1, due to a combination of operational factors, to ensure the reliability and integrity of the airline's overall route suspension is primarily driven by the planned shortfall in Air India's fleet, as the airline commenced retrofitting 26 of its Boeing 787-8 aircraft last month. This extensive retrofit programme, aimed at significantly enhancing customer experience, necessitates a prolonged unavailability of multiple aircraft at any given time until at least the end of coupled with the continued closure of airspace over Pakistan, impacts the airline's long-haul operations, leading to longer flight routings and increased operational with Air India bookings to or from Washington, DC, beyond September 1, 2025, will be contacted and offered alternative travel arrangements, including rebooking on other flights or full refunds, as per their individual India customers will continue to have the options of one-stop flights to Washington DC via four US gateways – New York (JFK), Newark (EWR), Chicago, and San Francisco – with the airlines interline partners, Alaska Airlines, United Airlines, and Delta Air Lines, allowing customers to travel on a single itinerary with their baggage checked through to the final India will continue to operate non-stop flights between India and six destinations in North America, including Toronto and Vancouver in Canada. (ANI)
Time of India
25 minutes ago
- Time of India
RBI said to have sold at least $5 billion to boost rupee
India's central bank sold US dollars across both onshore and offshore currency markets this month to prop up the rupee as it weakened toward a record low, according to people familiar with the transactions. The Reserve Bank of India sold at least $5 billion worth of the US currency, one of the people said, asking not to be identified as the information is private. The RBI didn't immediately respond to an email requesting comment on the matter. If the trend persists, it could become RBI's largest month of net dollar sales since January. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo The rupee fell to 87.89 per dollar last week, just shy of its all-time low as US President Donald Trump doubled tariffs on Indian goods on Aug. 6 to 50% as a penalty for its purchases of Russian oil. A weaker rupee could fuel imported inflation and strain an already fragile economic recovery. The intervention suggests a potential shift away from the RBI's previously restrained approach under Governor Sanjay Malhotra, who took office in December. The rupee has depreciated more than 2% so far this year, making it among Asia's worst-performing currencies. Roughly half of that drop came in the past two weeks after it became evident Trump was planning to increase the tariffs. Live Events 'The recent RBI intervention seems to have more to do with their dislike of the volatility in the exchange rate,' said Dhiraj Nim, currency strategist at Australia and New Zealand Banking Group Ltd. The rupee traded steady at 87.62 per dollar on Monday. On multiple occasions last week, the central bank was seen stepping into the offshore market just before domestic currency trading began at 9 a.m. Mumbai time, according to two of the people familiar with the matter, who declined to be identified as they aren't authorized to speak on it. Relying on so-called non-deliverable forwards allows the central bank to guide the rupee's trajectory without having to sell large volumes of dollars outright. The central bank heavily relied on this strategy last year. The RBI's latest foreign-exchange reserves data also point to increased intervention, with the stockpile falling by $9.3 billion, the steepest drop since November, to $689 billion in the week through Aug. 1. Part of the decline may reflect valuation changes in global currencies, not solely the central bank's dollar sales or purchases.
