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Business Standard
3 days ago
- Business
- Business Standard
RBI MPC meet: What stayed the same, what changed in August policy review
RBI's Monetary Policy Committee meeting today kept interest rates unchanged, lowered FY26 inflation forecast to 3.1 per cent, and CRR cut to begin in September 2025 New Delhi The Reserve Bank of India's Monetary Policy Committee (MPC) at its meeting concluded on August 6 decided to keep all key policy rates unchanged, following significant changes in earlier meetings this year. RBI MPC: What remains the same • The policy repo rate remains unchanged at 5.50 per cent, following a 50 basis point (bps) cut in the previous (June 2025) meeting • The MPC retained its policy stance as 'neutral' • The Standing Deposit Facility (SDF) rate remained unchanged at 5.25 per cent, and the Marginal Standing Facility (MSF) rate and bank rate stayed unchanged at 5.75 per cent during the August 2025 RBI MPC meeting • The RBI retained its real gross domestic product (GDP) growth forecast for FY26 at 6.5 per cent RBI MPC meet: What has changed CRR cut begins in September The RBI confirmed that the cut in the cash reserve ratio (CRR), announced in June, will begin from September 2025. RBI Governor Sanjay Malhotra said the move aims to maintain enough liquidity in banks to boost credit growth and keep financial markets stable. The central bank will keep policy rates unchanged so that earlier rate cuts can have their full effect. In June, the RBI decided to reduce the CRR from 4 per cent to 3 per cent of net demand and time liabilities (NDTL), in four steps of 25 basis points each, starting on September 6. Malhotra said India's banking sector remains strong, with good capital, liquidity, and profitability levels. Commercial banks have a Capital to Risk (Weighted) Assets Ratio (CRAR) of 17 per cent, net interest margin of 3.5 per cent, liquidity at 132 per cent, and a credit-deposit ratio of 78.9 per cent. Bank credit grew by 12.1 per cent in 2024-25. While this is slower than the 16.3 per cent growth seen in 2023-24, it is still above the 10-year average of 10.3 per cent. RBI MPC meet: Key rates Repo rate Previous MPC (June 2025): 5.50 per cent (after 50 bps cut) Current MPC (August 2025): 5.50 per cent (unchanged) CPI inflation Previous MPC (June 2025): 3.7 per cent projection for FY26 Current MPC (August 2025): 3.1 per cent projection for FY26 GDP growth Previous MPC (June 2025): 6.5 per cent projection for FY26 Current MPC (August 2025): 6.5 per cent projection for FY26 The quarterly inflation forecast stands as follows: Q2 FY26: 2.1 per cent, down from 3.4 per cent Q3 FY26: 3.1 per cent, down from 3.9 per cent Q4 FY26: Maintained at 4.4 per cent Q1 FY27: 4.9 per cent The quarterly GDP forecast stands as follows: Q2 FY26: 6.7 per cent Q3 FY26: 6.6 per cent Q4 FY26: 6.3 per cent
Time of India
3 days ago
- Business
- Time of India
No change in rates - RBI maintains repo rate at 5.50%
The Reserve Bank of India's Monetary Policy Committee (MPC) is said to announce the new monetary policy on Wednesday after a massive rate cut of 50 basis points announced in June 2025. The central bank has slashed the repo rate thrice this year amid global uncertainties on tariffs, protectionism, and trade wars that are affecting the global trade and growth outlook. The MPC started deliberations on the bi-monthly monetary policy on August 4 and is all set to announce the decision on August 6 (Wednesday). "Since the February 2025 MPC, the RBI has started to support growth by cutting policy rates. The repo rate has been cut by 50 basis points in two instalments, besides massive liquidity expansion," said MPC member Nagesh Kumar. The State Bank of India (SBI) announced that it expects a 25 basis points (bps) repo rate cut in the upcoming Monetary Policy Committee (MPC) meeting scheduled from August 4 to 6, stating that a frontloaded rate cut in August could bring an "early Diwali" by boosting credit growth, especially as the festive season in FY26 is also frontloaded. Here are the key highlights from the June MPC: The Repo Rate is reduced to 5.5 per cent The Standing Deposit Facility (SDF) rate is now 5.25 per cent The Marginal Standing Facility (MSF) and Bank Rate decreased to 5.75 per cent .The Cash Reserve Ratio (CRR) reduced to 3 per cent The RBI also changed its policy stance from 'accommodative' to 'neutral'. "As regards the stance for monetary policy, it is important to keep in mind that the stance not only reflects the current macroeconomic conditions, but more importantly the outlook that goes into policy calculus," RBI Governor Sanjay Malhotra said in June. Growth outlook In June, India's GDP growth for 2025-26 was projected at 6.5 per cent , continuing the previous forecast. The quarter-wise forecasts were as follows: Q1: 6.5 per cent Q2: 6.7 per cent Q3: 6.6 per cent Q4: 6.3 per cent Inflation In the last MPC meeting, the central bank's inflation announcements were as follows: Headline CPI inflation went down from 4 per cent in February 2025 to 3.7 per cent in April 2025Food inflation has declinedFuel inflation stayed in deflation The quarterly forecast were as follows: Q1: 2.90 per cent Q2: 3.40 per cent Q3: 3.9 per cent Q4: 4.4 per cent In the last MPC meeting, RBI stated that outlook for food inflation is looking good, due to the record wheat harvest and strong pulse and kharif arrivals. Core inflation was said to be largely stable and contained. Inflation expectations were showing a moderating trend in the country.
Economic Times
28-07-2025
- Business
- Economic Times
Indian rupee, bond markets cautious in week dominated by Fed, tariffs
The Indian rupee and government bonds will react to a host of cues this week, including a U.S. Federal Reserve policy decision and the August 1 reciprocal tariff deadline, which is likely to keep traders cautious. ADVERTISEMENT The rupee closed at 86.5150 against the U.S. dollar on Friday, down 0.4% on the week, as foreign portfolio outflows and uncertainty over a U.S.-India trade agreement kept sentiment tepid. While the Fed is widely expected to keep rates unchanged on Wednesday, investors will pay close attention to commentary from Fed Chair Powell to gauge the outlook for U.S. policy rates. "As long as the jobs picture holds up, firmer inflation may well delay the restart of the Fed easing cycle and provide the dollar with a lift this summer," ING said in a note. Later in the week, data on the U.S. labour market will be in focus alongside an inflation print to gauge how tariffs are affecting the world's largest economy. Meanwhile, the deadline to strike trade deals with the U.S. elapses on August 1. Over the weekend, the United States and the European Union announced a deal, which will result in a 15% tariff on EU goods, half what Trump had threatened to impose from August 1. ADVERTISEMENT Japan and the European Union have reached agreements with U.S., alongside others such as Indonesia and Vietnam, even as India's negotiations have appeared to run into roadblocks over key sectors such as dairy and agriculture. Traders reckon that the rupee will continue to hold a slightly bearish bias and hover in a 86.30-87 range in the near term. ADVERTISEMENT Heightened risk of "news-led price action" should prompt speculators to keep positions small with tight stop-losses, a trader at a foreign bank said. Meanwhile, India's 10-year benchmark 6.33% 2035 bond yield, which settled last week at 6.3505%, is expected to move in a range of 6.31% to 6.38%. ADVERTISEMENT Apart from the Fed guidance, focus will also remain on expectations about any potential rate cut in the RBI's upcoming policy decision, due on August 6. A plunge in India's retail inflation to a more-than-six-year low in June, along with expectations that it will slip to a record low in July, has led to increased talks of a rate cut, with some even expecting action next week. ADVERTISEMENT The central bank slashed its key interest rate by a steeper-than-expected 50 bps last month and changed its policy stance to "neutral" from "accommodative", which had fueled speculation that the rate cut cycle may be over. Banks will also gauge the liquidity situation and movement in overnight rates after a volatile last week, which saw rates rising beyond the Marginal Standing Facility rate. Foreign investors have been on the buying side, with net purchases of over 100 billion rupees in the last five weeks, as bets of at least one more rate cut have risen. India's fundamental story remains intact. Inflation is under control and fiscal health is in check, and India is one of the large benchmark weights within the JPMorgan emerging market debt index, said Jean‑Charles Sambor, head of emerging markets debt at TT International Asset Management. "We think that fundamentals will remain very attractive for foreign investors." ** June industrial output - July 28, Monday (4:00 p.m. IST)(Reuters poll - 2.4%) ** July HSBC manufacturing PMI - August 1, Friday (10:30 a.m.) U.S. ** July consumer confidence - July 29, Tuesday (7:30 p.m. IST) ** April-June GDP advance - July 30, Wednesday (6:00 p.m. IST) ** Federal Reserve monetary policy decision - July 30, Wednesday (11:30 p.m. IST)(Reuters poll - rates unchanged) ** Initial weekly jobless claims for week to July 21 - July 31, Thursday (6:00 p.m. IST) ** June personal consumption expenditure index, core PCE index - July 31, Thursday (6:00 p.m. IST) ** July non-farm payrolls and unemployment rate - August 1, Friday (6:00 p.m. IST) ** July S&P Global manufacturing PMI final - August 1, Friday (7:15 p.m. IST) ** July ISM manufacturing PMI - August 1, Friday (7:30 p.m. IST) ** July U Mich sentiment final - August 1, Friday (7:30 p.m. IST)
Mint
28-07-2025
- Business
- Mint
Indian rupee, bond markets cautious in week dominated by Fed, tariffs
By Dharamraj Dhutia and Jaspreet Kalra MUMBAI, July 28 (Reuters) - The Indian rupee and government bonds will react to a host of cues this week, including a U.S. Federal Reserve policy decision and the August 1 reciprocal tariff deadline, which is likely to keep traders cautious. The rupee closed at 86.5150 against the U.S. dollar on Friday, down 0.4% on the week, as foreign portfolio outflows and uncertainty over a U.S.-India trade agreement kept sentiment tepid. While the Fed is widely expected to keep rates unchanged on Wednesday, investors will pay close attention to commentary from Fed Chair Powell to gauge the outlook for U.S. policy rates. "As long as the jobs picture holds up, firmer inflation may well delay the restart of the Fed easing cycle and provide the dollar with a lift this summer," ING said in a note. Later in the week, data on the U.S. labour market will be in focus alongside an inflation print to gauge how tariffs are affecting the world's largest economy. Meanwhile, the deadline to strike trade deals with the U.S. elapses on August 1. Over the weekend, the United States and the European Union announced a deal, which will result in a 15% tariff on EU goods, half what Trump had threatened to impose from August 1. Japan and the European Union have reached agreements with U.S., alongside others such as Indonesia and Vietnam, even as India's negotiations have appeared to run into roadblocks over key sectors such as dairy and agriculture. Traders reckon that the rupee will continue to hold a slightly bearish bias and hover in a 86.30-87 range in the near term. Heightened risk of "news-led price action" should prompt speculators to keep positions small with tight stop-losses, a trader at a foreign bank said. Meanwhile, India's 10-year benchmark 6.33% 2035 bond yield , which settled last week at 6.3505%, is expected to move in a range of 6.31% to 6.38%. Apart from the Fed guidance, focus will also remain on expectations about any potential rate cut in the RBI's upcoming policy decision, due on August 6. A plunge in India's retail inflation to a more-than-six-year low in June, along with expectations that it will slip to a record low in July, has led to increased talks of a rate cut, with some even expecting action next week. The central bank slashed its key interest rate by a steeper-than-expected 50 bps last month and changed its policy stance to "neutral" from "accommodative", which had fueled speculation that the rate cut cycle may be over. Banks will also gauge the liquidity situation and movement in overnight rates after a volatile last week, which saw rates rising beyond the Marginal Standing Facility rate. Foreign investors have been on the buying side, with net purchases of over 100 billion rupees in the last five weeks, as bets of at least one more rate cut have risen. India's fundamental story remains intact. Inflation is under control and fiscal health is in check, and India is one of the large benchmark weights within the JPMorgan emerging market debt index, said Jean-Charles Sambor, head of emerging markets debt at TT International Asset Management. "We think that fundamentals will remain very attractive for foreign investors." KEY EVENTS: India ** June fiscal deficit - July 28, Monday (3:30 p.m. IST) ** June industrial output - July 28, Monday (4:00 p.m. IST)(Reuters poll - 2.4%) ** July HSBC manufacturing PMI - August 1, Friday (10:30 a.m.) U.S. ** July consumer confidence - July 29, Tuesday (7:30 p.m. IST) ** April-June GDP advance - July 30, Wednesday (6:00 p.m. IST) ** Federal Reserve monetary policy decision - July 30, Wednesday (11:30 p.m. IST)(Reuters poll - rates unchanged) ** Initial weekly jobless claims for week to July 21 - July 31, Thursday (6:00 p.m. IST) ** June personal consumption expenditure index, core PCE index - July 31, Thursday (6:00 p.m. IST) ** July non-farm payrolls and unemployment rate - August 1, Friday (6:00 p.m. IST) ** July S&P Global manufacturing PMI final - August 1, Friday (7:15 p.m. IST) ** July ISM manufacturing PMI - August 1, Friday (7:30 p.m. IST) ** July U Mich sentiment final - August 1, Friday (7:30 p.m. IST) (Reporting by Dharamraj Dhutia and Jaspreet Kalra; Editing by Vijay Kishore)
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Business Standard
30-06-2025
- Business
- Business Standard
Rupee ends first quarter flat amid global tensions and dollar weakness
The rupee witnessed a volatile trading range during the first quarter of the current financial year but ultimately ended the period largely flat, 0.3 per cent weaker against the dollar. The domestic currency settled at 85.77 against the dollar on Monday, nearly unchanged from its level at the beginning of the quarter at 85.47 per dollar. 'There was considerable two-way movement in the rupee during the quarter,' said the treasury head at a private bank. 'The currency weakened in April due to the global trade war, and again in June as geopolitical tensions escalated following the Iran-Israel conflict. These events led to a sharp depreciation in the rupee at the time. There was a phase where the rupee appreciated sharply towards 83.75, before bouncing back again to 86.70 levels. The last two weeks of the quarter saw renewed appreciation,' he added. The local currency staged a strong recovery in the latter part of June, aided by broad-based dollar weakness, robust foreign inflows driven by recent IPO activity, and easing crude oil prices, according to market participants. The RBI's outstanding net short dollar position in the forward market fell further to $45 billion by the end of May, against $52 billion at the end of April, according to the central bank's latest data. Of the $45 billion net short dollar position, $4.8 billion was in one-month contracts, $10.2 billion in one- to three-month tenures, and the remaining $30 billion position is set to mature between three months and a year. Around $20 billion in short positions are set to mature in more than a year. 'The RBI did not roll over the contracts in May — around $7 billion was maturing in the month — and in June the short positions could have decreased more to around $40 billion,' said a market participant. Meanwhile, the RBI, in a notification on Monday, announced that following the extension of call money market hours to 7:00 pm, the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) will now be available from 7:00 pm to 11:59 pm, effective Tuesday.
