RBI likely to hold rates steady in August, but more cuts may be on the horizon: Nuvama
Reserve Bank of India
(
RBI
) is likely to maintain the benchmark policy rate at 5.5% in its upcoming
monetary policy
meeting, according to a recent report by
Nuvama Institutional Equities
.
After a surprise front-loading of a 50 basis points rate cut and a shift to a 'neutral' stance in the last policy, the central bank appears to be signalling limited room for further easing.
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
Brain tumor has left my son feeling miserable; please help!
Donate For Health
Donate Now
Undo
However,
Nuvama
believes the case for more rate cuts remains strong.
Growth Momentum Falters
The report underlines that domestic economic activity has visibly slowed in recent quarters. 'Corporates are contending with subdued revenue and profit growth, which in turn is inhibiting capex,' Nuvama noted.
Live Events
Simultaneously, households are facing weaker income growth and a deceleration in loan growth, dampening consumption demand.
Adding to the concerns, government expenditure is unlikely to provide a significant boost, while tax revenues have slipped below the 10% year-on-year mark. External demand also appears fragile amid global trade tensions.
Consequently, several economic indicators — including credit growth, exports, auto sales, real estate transactions, and corporate profits — have decelerated to single-digit growth, resembling pre-pandemic patterns.
Inflation Under Control
On the inflation front, the report highlights a benign landscape. Headline Consumer Price Index (CPI) inflation is near a six-year low, and core CPI (excluding volatile items) has remained below 4% for an extended period. 'Corporate commentary also suggests a lack of pricing power in the economy,' Nuvama stated.
Additionally, the global macro backdrop, marked by narrowing US trade deficits and export redirection by surplus nations like China, is expected to remain deflationary.
Policy Outlook: Steady Now, Easing Later?
Given the current mix of benign inflation and weakening growth, the Nuvama report argues for further monetary easing down the line. Although the RBI is expected to hold rates steady for now, the possibility of returning to an 'accommodative' stance cannot be ruled out if inflation continues to undershoot expectations.
'Systemic liquidity is ample and may remain so, and monetary transmission is progressing well,' the report added, suggesting that RBI has room to maneuver if conditions deteriorate.
Global Central Banks May Lead the Way
Nuvama also expects global central banks, particularly the US Federal Reserve, to resume rate cuts later this year. This could create further headroom for the RBI to follow suit, especially as fiscal policy in India remains broadly neutral to contractionary.
All eyes will be on the RBI's forward guidance, which could offer clues about a potential shift back to an easing bias.
(
Disclaimer
: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
25 minutes ago
- Time of India
Eye on Beijing, Delhi & Manila unite in strategic partnership
NEW DELHI: India and the Philippines upgraded their relationship to a strategic partnership with focus on expanding defence, security and maritime cooperation, as PM Modi on Tuesday hosted President Ferdinand Marcos Jr for bilateral talks. The two sides signed 13 agreements and MoUs, which included finalisation of terms of reference for cooperation between all three wings of the armed forces, as Modi expressed support for freedom of navigation in the Indo-Pacific in line with international laws. Amid protests by China against joint patrolling by India and the Philippines in the South China Sea (SCS), both sides expressed concern over "coercive and aggressive actions" there that impact regional peace and stability and called upon relevant parties to exercise self-restraint and commit to peaceful and constructive means to resolve and manage disputes. According to a joint statement, the leaders underscored that the final and binding 2016 arbitral award on the SCS was a significant milestone and the basis for peacefully resolving disputes in accordance with international law. The award had refuted China's expansive claims on SCS waters in its dispute with Manila. In 2023, India had for the first time explicitly called upon China to abide by the ruling and followed it up with a similar assertion in a joint statement with Quad a year later. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like New Container Houses Cameroon (Prices May Surprise You) Container House | Search ads Search Now Undo Among other key takeaways from the meeting was adoption of terms of reference for negotiations for a preferential trade agreement and signing of an agreement for mutual legal assistance in criminal matters. The leaders also adopted a plan of action (2025-2029) for implementation of the strategic partnership. India also announced a gratis e-tourist visa facility for Filipino nationals for a period of one year. Modi also thanked Marcos, who has been looking to ramp up defence and security cooperation with countries like India and Japan amid increasing tensions with China in the SCS, for a strong condemnation of the Pahalgam terrorist attack. "As maritime nations, maritime cooperation between the two countries is both natural and necessary. Today, when the President is in India, three ships of the Indian Navy are participating in a naval exercise in the Philippines for the first time. India's hydrography ship is also involved in this," Modi said, adding that India and Philippines are friends by choice, and partners by destiny. The leaders called for expeditious conclusion of negotiations for the preferential trade agreement (PTA) for promotion of mutual trade and Manila expressed interest in procuring more defence equipment from India, apart from the BrahMos missile defence systems India is already supplying to it. For India, helping Manila build up its defence capabilities is also a way of getting back at Beijing, a major defence supplier to Pakistan. The visit by Marcos, who backed interoperability between the armed forces of the two countries, coincided with India's first joint patrol of the SCS with the Philippines. The PLA accused the Philippines of "rallying an external country to interfere in the SCS by organising so-called joint patrols which undermine regional peace and stability". It did not name India. The visit by Marcos also took place ahead of a likely visit to China by Modi later this month for the SCO summit. Talks are also on for a possible visit by Chinese foreign minister Wang Yi to India this month.
Time of India
30 minutes ago
- Time of India
OpenAI responds to DeepSeek with two 'open' models
OpenAI is releasing a pair of open and freely available artificial intelligence models that can mimic the human process of reasoning, months after China's DeepSeek gained global attention with its own open AI software. The two models, called GPT-oss-120b and GPT-oss-20b , will be available on AI software hosting platform Hugging Face and can produce text - but not images or videos-in response to user prompts, OpenAI said on Tuesday. These models can also carry out complex tasks like writing code and looking up information online on a user's behalf, the company said. 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 Crucially, the models are both open-weight systems, similar to Meta Platforms Inc. 's Llama. The term "weight" refers to the parameters in an AI model. OpenAI is disclosing the many numerical values the models picked up and were tweaked with during the training process, allowing developers to better customise them. However, OpenAI is not revealing the data used to train them, falling short of the definition for a truly open source AI model. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Despite its name, most of OpenAI's models are closed systems -the kind of software that's controlled by the developer, can't be modified by users, and includes less transparency about its technical underpinnings. Like many of its US rivals, OpenAI has guarded its training data and focused on charging more for its most powerful models to offset the immense cost of development.
Time of India
30 minutes ago
- Time of India
NARCL offers ₹550 crore for Jaypee Cement & Reliance Infra assets
The National Asset Reconstruction Co ( NARCL ) has submitted binding offers for two distressed assets, including Jaypee Cement Corp. The other asset is a toll road entity of Anil Ambani 's Reliance Infra . For the Salem-Ulundurpet toll road, NARCL has offered ₹280 crore against total debt of about ₹600 crore. The bid for Jaypee Cement stands at ₹270 crore against outstanding debt of ₹2,200 crore. Dalmia Bharat had earlier shown interest in acquiring Jaypee's cement assets. 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 NARCL is betting on improved recovery prospects through a resolution or potential sale. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like This Is Why Smart People Put Baking Soda in Their Shampoo Read More Undo Jaypee Cement is a subsidiary of Jaypee Associates, once a major property and infrastructure company owning substantial assets in Noida and Greater Noida suburbs of the NCR. These bids are in a 15:85 structure where 15% is paid in cash and remaining in security receipts. NARCL acquires 15% of the value of accounts upfront in cash, while the remaining is issued to the selling banks as Security Receipts (SRs) for which the government has provided a sovereign guarantee. Live Events The toll project, which is a 136-km highway connecting NH-68 to key Tamil Nadu corridors was scheduled to be operational by January 2011 but achieved full commissioning only by August 2013. However, it got delayed leading to financial pressures. JCCL, a wholly owned unit of Jaiprakash Associates, operates a 1.2 MTPA cement grinding unit and a 60 MW captive power plant in Shahabad, Karnataka, while another 1.2 MTPA capacity remains suspended. In December 2022, Dalmia Cement (Bharat) signed a ₹5,666 crore binding agreement to acquire key cement, clinker, and power assets from Jaypee Group across three states. However, the deal has been delayed due to pending regulatory approvals and legal hurdles. In March a 25-bank consortium led by SBI transferred ₹12,700 crore of JAL's stressed loans to NARCL. JAL is under CIRP process for in-court resolution and five bidders including Adani and Dalmia have shown interest in acquiring the asset. As of March 31, 2025, NARCL had managed ₹1.6 lakh crore in debt with ₹29,000 crore of assets under management.
