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RBI may go for another 25 bps rate cut in August, repo rate to come down at 5.25%: Report
RBI may go for another 25 bps rate cut in August, repo rate to come down at 5.25%: Report

Times of Oman

time2 days ago

  • Business
  • Times of Oman

RBI may go for another 25 bps rate cut in August, repo rate to come down at 5.25%: Report

Mumbai: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) may go for another cut in the policy rate of 25 basis points (bps) in the upcoming August policy meeting, bringing it down to 5.25 per cent, according to a report by ICICI Bank. The report explained that the growth outlook in India remains mixed. While urban demand is weak, rural demand continues to remain strong. Goods exports to the United States are showing improvement, but exports to other regions remain weak. Considering these trends and the current inflation situation, the report believed that August is the right time for a rate cut. It stated "we believe this opens up policy space for an additional 25bps rate cut, taking the terminal rate to 5.25 per cent. When would the MPC cut the policy rate? We believe that August would be the appropriate time for the same, given the muted inflation scenario". The report added that inflation has been much lower than expected since the last MPC meeting. It now estimates inflation for FY26 to average at 2.9 per cent, which is much lower than RBI's earlier projection of 3.7 per cent. This downward trend in inflation opens up space for further policy easing, especially since the MPC currently maintains a neutral stance, which means decisions depend on economic data. The report also mentioned that inflation is expected to rise in Q4 and FY27 due to the base effect. Therefore, the opportunity for the MPC to cut rates may not be available later in the year. On the global front, the report said that the economic outlook remains uncertain and volatile due to tariffs and geopolitical events. A brief conflict in the Middle East last month led to a sharp rise in oil prices. Also, the recent tariffs announced by U.S. President Donald Trump, set to be implemented from August 1, are higher than current levels and are already reflecting in inflation data. U.S. inflation rose to 2.7 per cent year-on-year in June from 2.4 per cent in May. While the U.S. economy has performed better than expected, there are signs of slowing momentum. Private hiring is weakening and retail sales have dropped, which indicates possible stagflation in the near term. This situation is currently preventing the U.S. Federal Reserve from cutting interest rates. However, as growth weakens further in the coming months, the Fed may turn more supportive of rate cuts later this year.

Ghana's central bank convenes emergency MPC meeting
Ghana's central bank convenes emergency MPC meeting

Reuters

time3 days ago

  • Business
  • Reuters

Ghana's central bank convenes emergency MPC meeting

ACCRA, July 17 (Reuters) - Ghana's central bank convened an emergency meeting of its Monetary Policy Committee on Thursday to assess recent economic developments, the bank said in a statement. The Bank of Ghana's fourth rate-setting MPC meeting for the year had initially been slated to start on July 28, with the rate decision expected on July 30. In a statement released late Wednesday, the central bank said the MPC would "review recent developments in the economy" during the special session. The outcome of the meeting, including any policy decisions, will be announced on Friday. The Bank of Ghana last held a scheduled MPC meeting in May, where it opted to maintain the policy rate at 28.0%, maintaining its tight monetary policy as inflationary pressures continued to ease due to exchange rate stability and fiscal consolidation. Ghana's consumer price inflation slowed for the sixth month in a row to 13.7% in June, its lowest level since 2021, while the bellwether producer price inflation fell to 5.9% year-on-year in June compared with 10.2% the previous month. The finance minister is expected to present the cocoa-, gold-, and oil-producing West African nation's mid-year fiscal policy review on July 24.

Will interest rates be cut in August? The key factors for the Bank of England and 2025 predictions
Will interest rates be cut in August? The key factors for the Bank of England and 2025 predictions

The Independent

time4 days ago

  • Business
  • The Independent

Will interest rates be cut in August? The key factors for the Bank of England and 2025 predictions

The Bank of England 's (BoE) next meeting to determine interest rates is on Thursday 7 August, and all eyes will be on the Monetary Policy Committee (MPC) and whether its members opt to continue lowering rates. The base rate - currently at 4.25 per cent following cuts in February and May - impacts consumers and taxpayers through everything from their mortgages to savings, so what do experts foresee both next week and beyond? Will interest rates be cut? Probably, but no longer definitely. We have been seeing the MPC opt for a quarterly rate this year, in line with governor Andrew Bailey's constant refrain of 'gradual and careful'. The BoE chief did say as recently as this week he still sees a downward trend, but that doesn't guarantee that the cut comes now. As recently as last week, markets were pricing in an 85 per cent chance of a rate cut, but inflation data for June came in at 3.6 per cent - hotter than expected and a real headache to the question of rates cuts. Factor in that as well as the domestic situation, we've had more uncertainty in 2025 over Donald Trump's tariffs, businesses dealing with higher labour costs coming into force and escalated tensions after Israel's strike on Iran led to a brief oil price scare. As such, most analysts expect the MPC's June decision to be a split vote, but at present more still lean towards a cut in the Bank Rate (to give it the official term) to 4.00 per cent. Rob Morgan, chief investment analyst at Charles Stanley, said it should still happen this time around - but beyond that the picture is more cloudy: 'An August cut still seems likely as the lacklustre growth picture and the deteriorating labour market come more sharply into focus, but the lingering effect of wage inflation and payroll costs could make further cuts a longer time coming.' It's worth remembering that for mortgages in particular, many products are priced using future expectations of the interest rate, so changes in that market can already be accounted for. For savers, whether or not an immediate cut to variable rates is coming, it's always worth checking the best offers on the market to make sure your money is earning as much as it can for you - or, over the longer term, looking to invest. Influential factors around cuts The MPC has nine members and their votes decide if the base rate is cut, raised or kept the same. Among the factors MPC members will have been looking at are job and wages data, the level of inflation across the UK, economic growth and also external factors which can impact the UK. Inflation data came in higher than expected in June at 3.6 per cent, through food and transport costs particularly. Higher inflation is a reason to keep interest rates up, as it can discourage businesses from investing in new projects or hiring - which in turn raises earnings and spending power. Therefore, fewer jobs or pay hikes means the opposite: lower spending power, lower demand, helping stem further price rises. Recent key data has shown salary growth slowing and unemployment rising - these are factors which can see interest rates decrease. It means the BoE have a real balancing act to perform this time, as noted by Peter Stimson of MPowered Mortgages. 'Britain's inflationary relapse [in June] will crystallise the view that the time is right to cut the Base Rate to give the stagnant economy the boost it needs, and when the MPC meets in three weeks' time it's likely several members will vote to hold off on a rate cut,' he said. 'While the weakness of the economy means the Bank will be keen to resume rate cuts in coming months, the likelihood of an August cut has plunged from near certain to barely 50/50.' What about the rest of 2025? Many analysts still expect two rate cuts between now and the end of 2025, one in August and one in November, to bring the base rate down to 3.75 per cent. Rob Clarry, investment strategist at Evelyn Partners, noted the markets still felt that way too: 'Traders continue to expect two further 25 basis point interest rate cuts this year.' Deutsche Bank's chief UK economist, Sanjay Raja, believes future cuts will depend almost entirely on the jobs market. 'Is an August rate cut in jeopardy? No, we don't think so,' he said. 'There's enough of a slowdown in GDP and the labour market to warrant a 'gradual and careful' easing of monetary policy. But the onus now rests on the labour market to shape how far and how fast the MPC can cut this year and next.'

MPC decides to maintain key policy rates
MPC decides to maintain key policy rates

bnok24

time10-07-2025

  • Business
  • bnok24

MPC decides to maintain key policy rates

Central Bank of Egypt The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) has decided today to maintain the CBE's overnight deposit rate, overnight lending rate, and the rate of the main operation at 24.00 percent, 25.00 percent, and 24.50 percent, respectively. The Committee also decided to keep the discount rate unchanged at 24.50 percent. This decision reflects the most recent outlook and assessment of economic conditions since the previous MPC meeting. Globally, growth forecasts have softened since the beginning of the year primarily due to persistent uncertainty in global trade policies and the resurgence of geopolitical tensions. In response, central banks in both advanced and emerging market economies have adopted a cautious stance on monetary policy, reflecting the prevailing uncertainties surrounding inflation and economic growth. In terms of global commodity prices, oil prices have recently shown significant volatility, largely influenced by supply-side dynamics and expectations of weakening global demand. Meanwhile, the prices of key agricultural commodities have witnessed a slight decline, supported by favorable seasonal trends. Nevertheless, upside risks to inflation remain elevated, driven by heightened geopolitical tensions, the possibility of further disruptions in global trade policies, and shocks related to climate change Domestically, the CBE nowcast for Q2 2025 signals a sustained recovery in economic activity, which is projected to remain close to the 4.8 percent annual figure recorded in Q1 2025 compared to 2.4 percent in Q2 2024. As such, the estimated output gap is gradually narrowing, albeit still marginally negative, with the economic activity expected to reach potential by end of FY 2025/26. Accordingly, demand-side inflationary pressures are expected to remain subdued, supported by the current monetary stance Annual headline inflation declined during Q2 2025 to 15.3 percent compared to 16.5 percent in Q1 2025, continuing the general downward trajectory. This can be attributed to broadly stable monthly dynamics, a sufficiently tight monetary stance, and subsiding shocks. In particular, both annual headline and core inflation in June 2025 declined to 14.9 percent and 11.4 percent, respectively. The improvement is mainly driven by deflationary monthly dynamics, with headline and core inflation recording negative 0.1 percent and negative 0.2 percent, respectively—primarily explained by declining food prices and broadly stable non-food inflation The recent favorable dynamics in both headline and core inflation have contributed to the improvement of inflation expectations. Therefore, annual headline inflation is expected to stabilize around current levels during the remainder of 2025, before steadily declining in 2026, subject to the stickiness of non-food inflation and the pass-through of fiscal consolidation measures (e.g., administered price changes) to domestic prices. However, a wait-and-see approach is required before proceeding further with the monetary easing cycle, especially that this approach would allow for time to gauge the possible effects of recently announced legislative amendments, such as value-added tax reforms In view of the above, the MPC judges that maintaining policy rates at their current level is appropriate to support the disinflation path. The Committee will continue to evaluate its decisions regarding the magnitude and pace of policy adjustment on a meeting-by-meeting basis. These decisions will continue to be a function of the forecast trajectory, and proactively responsive to incoming data and shifts in the balance of risks. The MPC will closely monitor economic and financial developments, and will not hesitate to utilize all tools at its disposal to achieve its price stability mandate, steering inflation towards its target of 7 percent (± 2 percentage points), on average, in Q4 2026 Google News تابعونا على تابعونا على تطبيق نبض

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