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Business Standard
3 days ago
- Business
- Business Standard
RBI to cut rates by 25 bps on June 6, then once more in August: Poll
The Reserve Bank of India will cut interest rates on June 6 for a third consecutive meeting and once more in August to support a weakened economy, according to a Reuters poll of economists whose forecasts were largely unchanged from the last survey. With economic growth cooling sharply to 6.3 per cent last fiscal year from over 9 per cent the year before and inflation staying below the RBI's 4.0 per cent target, the RBI has ample room to cut rates. Other major central banks were also expected to ease policy further amid rising global tensions fuelled by US President Donald Trump's trade war. A strong majority of economists, 53 of 61, in a May 19-28 Reuters poll expected the RBI to cut the repo rate to 5.75 per cent at the conclusion of its June 4-6 meeting. Two respondents predicted a cut of 50 basis points and the remaining six expected no change. More than 80 per cent of economists, 47 of 58, forecast the key rate to end August at 5.50 per cent. That was an increase from a survey conducted last month where just over half had held that view. "The global risks we are facing in terms of trade tensions are downside risks to global growth and, hence, to India's growth," said Dhiraj Nim, economist at ANZ and one of the few looking for two more cuts after an expected June 6 reduction. "If domestic inflation is not an issue, then these risks should also lead to a stronger counter-cyclical policy response from the RBI." Rates could drop more than what economists are currently expecting if a trade deal with the US fails to materialise. For now, a total expected easing of just 100 basis points would mark the shortest and shallowest RBI rate-cutting cycle in over a decade. Meanwhile, the Indian stock market was forecast to hit a new high by end-2025 despite concerns about its lofty valuations, a separate Reuters poll found. That partly reflects a relatively upbeat view on the economy. The poll also showed gross domestic product (GDP) growth was expected to average 6.3 per cent this fiscal year, and 6.5 per cent next. Indranil Pan, chief economist at Yes Bank, said the February rate cut did not translate into much easing in lending rates by banks due to tight liquidity. Still, bank deposit rates have come down and it is unclear whether that reflects actual policy transmission or signs of stress in the banking system, he added.
Business Recorder
3 days ago
- Business
- Business Recorder
RBI to cut rates by 25 bps on June 6, then once more in August
BENGALURU: The Reserve Bank of India will cut interest rates on June 6 for a third consecutive meeting and once more in August to support a weakened economy, according to a Reuters poll of economists whose forecasts were largely unchanged from the last survey. With economic growth cooling sharply to 6.3% last fiscal year from over 9% the year before and inflation staying below the RBI's 4.0% target, the RBI has ample room to cut rates. Other major central banks were also expected to ease policy further amid rising global tensions fuelled by U.S. President Donald Trump's trade war. A strong majority of economists, 53 of 61, in a May 19-28 Reuters poll expected the RBI to cut the repo rate to 5.75% at the conclusion of its June 4-6 meeting. Two respondents predicted a cut of 50 basis points and the remaining six expected no change. More than 80% of economists, 47 of 58, forecast the key rate to end August at 5.50%. That was an increase from a survey conducted last month where just over half had held that view. 'The global risks we are facing in terms of trade tensions are downside risks to global growth and, hence, to India's growth,' said Dhiraj Nim, economist at ANZ and one of the few looking for two more cuts after an expected June 6 reduction. 'If domestic inflation is not an issue, then these risks should also lead to a stronger counter-cyclical policy response from the RBI.' Rates could drop more than what economists are currently expecting if a trade deal with the U.S. fails to materialise. For now, a total expected easing of just 100 basis points would mark the shortest and shallowest RBI rate-cutting cycle in over a decade. Meanwhile, the Indian stock market was forecast to hit a new high by end-2025 despite concerns about its lofty valuations, a separate Reuters poll found. India's central bank seeks approval for overseas rupee lending to neighbours, sources say That partly reflects a relatively upbeat view on the economy. The poll also showed gross domestic product (GDP) growth was expected to average 6.3% this fiscal year, and 6.5% next. Indranil Pan, chief economist at Yes Bank, said the February rate cut did not translate into much easing in lending rates by banks due to tight liquidity. Still, bank deposit rates have come down and it is unclear whether that reflects actual policy transmission or signs of stress in the banking system, he added.
Reuters
3 days ago
- Business
- Reuters
RBI to cut rates by 25 bps on June 6, then once more in August
BENGALURU, May 29 (Reuters) - The Reserve Bank of India will cut interest rates on June 6 for a third consecutive meeting and once more in August to support a weakened economy, according to a Reuters poll of economists whose forecasts were largely unchanged from the last survey. With economic growth cooling sharply to 6.3% last fiscal year from over 9% the year before and inflation staying below the RBI's 4.0% target, the RBI has ample room to cut rates. Other major central banks were also expected to ease policy further amid rising global tensions fuelled by U.S. President Donald Trump's trade war. A strong majority of economists, 53 of 61, in a May 19-28 Reuters poll expected the RBI to cut the repo rate to 5.75% at the conclusion of its June 4-6 meeting. Two respondents predicted a cut of 50 basis points and the remaining six expected no change. More than 80% of economists, 47 of 58, forecast the key rate to end August at 5.50%. That was an increase from a survey conducted last month where just over half had held that view. "The global risks we are facing in terms of trade tensions are downside risks to global growth and, hence, to India's growth," said Dhiraj Nim, economist at ANZ and one of the few looking for two more cuts after an expected June 6 reduction. "If domestic inflation is not an issue, then these risks should also lead to a stronger counter-cyclical policy response from the RBI." Rates could drop more than what economists are currently expecting if a trade deal with the U.S. fails to materialise. For now, a total expected easing of just 100 basis points would mark the shortest and shallowest RBI rate-cutting cycle in over a decade. Meanwhile, the Indian stock market was forecast to hit a new high by end-2025 despite concerns about its lofty valuations, a separate Reuters poll found. That partly reflects a relatively upbeat view on the economy. The poll also showed gross domestic product (GDP) growth was expected to average 6.3% this fiscal year, and 6.5% next. Indranil Pan, chief economist at Yes Bank, said the February rate cut did not translate into much easing in lending rates by banks due to tight liquidity. Still, bank deposit rates have come down and it is unclear whether that reflects actual policy transmission or signs of stress in the banking system, he added. (Other stories from the May Reuters global economic poll)
Zawya
09-05-2025
- Business
- Zawya
Indian markets dip as conflict with Pakistan escalates; Romania's leu set for worst week in 16 years
Indian markets took a hit on Friday, following reports of overnight drone and munitions assaults by Pakistani forces, while Romania's leu faced its steepest weekly decline in over 16 years. India's benchmark indexes, dropped over 1.2% each, and were poised to register their first weekly loss in four. The tension escalated as Pakistan's armed forces executed multiple attacks using drones and munitions along India's western border, according to the Indian army, further intensifying the conflict between the two nuclear-armed neighbours. The Indian rupee, which fell by 1% in the previous session, was showing a slight recovery, trading marginally higher at present. Traders speculate that the Reserve Bank of India might have intervened through state-run banks to stabilize the currency. Concurrently, Indian government bond yields saw an uptick. "There are no material signals to indicate de-escalation of tensions between India and Pakistan. There is both a sense of nervousness if it does not de-escalate quickly and there's a sense of comfort as its not boiling over," said Dhiraj Nim, an FX strategist and economist at ANZ. "This near term risk aversion would prevail.. until we see some kind of a resolution come through via diplomatic channels." Across the border, Pakistan's stock index managed a 0.2% rise after a near 7% fall on Thursday, alongside a 0.2% increase in its rupee. The MSCI Emerging Market Index ticked up 0.4%, while a parallel currency measure remained flat. Emerging markets navigated a dynamic week, marked by vigilant central bank meetings concerned about U.S. tariffs, while assessing the impacts of military conflicts and digesting mixed signals from the U.S.-China trade discussions. Chinese markets were mixed, with the blue chip down 0.2%, while Hong Kong's Hang Seng was up 0.4%. Anticipation was high for the upcoming Geneva meeting between the two parties, though concerns lingered that the limited trade agreement with London might not serve as a robust template for further deals, tempering optimism about Sino-U.S. trade negotiations. China's exports surpassed forecasts in April, buoyed by a surge in demand from manufacturers hastening production to capitalize on U.S. President Donald Trump's 90-day tariff pause. Elsewhere, Romania's leu was on track for its most significant weekly loss since January 2009, following the lead taken by hard-right presidential candidate George Simion in Sunday's first-round vote. Bucharest's benchmark index was set for its toughest week in nearly three years. JPMorgan analysts have forecast a 50-50 probability that political turmoil in Romania could trigger a 15-20% devaluation of the leu, with the alternative being a more modest 5% depreciation. S&P Global Ratings anticipates that Romanian policymaking will become increasingly fragmented, less stable, and less effective in the coming months, potentially leading to weaker growth, fiscal, and external outcomes. Its 'BBB-' sovereign ratings on Romania carry a negative outlook. "If the direction of politics takes a turn for the worse, in a market like Romania, and we had money there... we would pretty quickly react and run for the exits," said Rob Brewis, portfolio manager at Aubrey Capital Management. Hungary's forint slipped 0.2%, while Budapest's stock index rose 1.2%, nearing record highs. The government aims to maintain inflation within a 3% to 4% range, following data showing annual price growth slowed to 4.2% in April, yet still exceeding market expectations. (Reporting by Pranav Kashyap in Bangalore; Editing by Shailesh Kuber)
Time of India
08-05-2025
- Business
- Time of India
RBI's dividend payment to govt for FY25 set to beat estimates, could be 50% higher than FY24
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: Reserve Bank of India's (RBI) surplus transfer to North Block for the last fiscal could be as high as ₹3 lakh crore, much higher than that estimated a month ago. Robust gross dollar sales, higher foreign exchange gains, and anticipated increases in interest income should help boost the payout, recent reports by economists said. The new estimate of ₹3 lakh crore is 50% more than the ₹2.1 lakh crore paid in the previous fiscal estimates for FY25 worked with the ballpark of around ₹2-₹2.5 lakh crore, showed an ET poll of 10 institutions published April ANZ Banking Group had estimated a transfer of ₹3.25 lakh crore. The government had estimated a dividend of ₹2.3 lakh crore in its budget."We estimate an RBI dividend of ₹2.6 lakh to ₹3 lakh crore, depending on the level of provisioning. The higher dividend creates a fiscal space of 0.1% to 0.2% of GDP," Gaura Sen Gupta, chief economist at IDFC First Bank , said in a report on are raising estimated payouts as the transfer time-window nears. "RBI's FY25 dividend payout to the government is projected to increase, fuelled by higher income from forex reserve deployments due to elevated US treasury yields," a report by the ICICI Research team said. "This boost is further supported by strong commissions from forex operations and interest income on government securities."The dividend could help the Centre shrink the fiscal gap. Plus, spending from the government would pump liquidity into the banking system, and the liquidity would be visible from early July, economists said"Gross dollar sales rose to $371.6 billion in FY25, till February versus $153 billion in FY24. Meanwhile, decline in GSec yields has resulted in MTM (market to market) gains on RBI's holdings of rupee securities. In FY25, RBI's holdings of rupee securities increased by ₹1.95 lakh crore to ₹15.6 lakh crore as of March 2025," according to IDFC First RBI was the top seller of foreign exchange reserves in January among other Asian central banks. Foreign exchange reserves peaked in September 2024 to $704 billion and the RBI is estimated to have sold over $125 billion since then, according to estimates by Nomura and DBS Bank."The RBI undertook significant dollar sales to support the rupee and maintain exchange rate stability. Additionally, tight systemic liquidity prompted the RBI to extend funds to banks, thereby contributing to its interest income. Therefore, the dividend payout for FY25 is likely to be large," said Dhiraj Nim, economist and FX strategist, ANZ Banking Group. Contingency provisions are expected to be similar to last year, or higher. Provisions stood at ₹42,800 crore and is expected to be between ₹40,000 crore and ₹80,000 crore, according to IDFC First surplus amount of the dividend is arrived at on the basis of the Economic Capital Framework (ECF) adopted by the Reserve Bank on August 26, 2019 as per recommendations of the Expert Committee to Review the ECF chaired by former governor Bimal Jalan. Committee had recommended that the risk provisioning under the Contingent Risk Buffer (CRB) be maintained within a range of 6.5% to 5.5% of the RBI's balance sheet.
