Latest news with #SoumyakantiGhosh
New Indian Express
6 days ago
- Business
- New Indian Express
Rating upgrade to bring borrowing cost down for govt and companies, raise forex inflows
MUMBAI: The sovereign rating upgrade to BBB from BBB- with stable outlook, which comes after a long 18-year gap, will make India an attractive investment destination apart from bringing down the cost of borrowings for both the government and corporates, according to analysts. As expected, the bond yields eased following the news. The 10-year benchmark bond yield eased to 6.4052% at close from 6.4742% at open. The rupee, which has been under pressure for long, gained after the upgrade, recouping from a low earlier in the day. The currency closed 11 paise higher at 87.55 against the greenback after opening at 87.67. The rupee has lost 2.4% so far this financial year. However, the stock market ignored the development with a see-saw trade and ended the day marginally higher with the Sensex adding 0.07% and the Nifty adding 0.05%. According to Soumyakanti Ghosh, the chief economic advisor at State Bank of India, the rating agencies did not capture the country's fundamentals for almost a decade. The current rating action by S&P reaffirms the position that India's rating ought to have been on the higher side. Ghosh said the current rating upgrade 'hinges on three fundamental observations — credible fiscal consolidation, strong external position and well anchored inflationary expectations, also an acknowledgement that quality of government spending has improved in the past five to six years." According to Radhika Rao, the senior economist at the Singaporean lender DBS Bank, the S&P upgrade brings the country on par with Indonesia and Mexico. 'The positive impetus on the back of this upgrade will help lower the credit premium on the sovereign's debt as well as further ease corporates' offshore borrowing costs,' Rao said. "The upgrade is driven by improvement in the economy's macro backdrop, including material progress towards fiscal consolidation goals. With this year's budget focused on aligning deficits with overall debt levels, we expect cumulative deficit and debt levels to come down in the coming years, aided by healthy growth momentum as well as consolidation," she said further.
New Indian Express
06-08-2025
- Business
- New Indian Express
Analysts rule out more repo rate cuts this year amid inflation worries
MUMBAI: Most analysts have ruled out further repo rate cuts in 2025 given the hawkish inflation stance that the central bank has taken in the current review wherein it has unanimously voted to leave all the key rates unchanged at 5.5%. Soumyakanti Ghosh, the chief economic advisor to the State Bank, in a note Wednesday said even though the MPC has pared its CPI inflation forecast for FY26 by a significant 60 bps to 3.1%, it sees inflation shooting up again and crossing the 4-percent mark in the March quarter and further rising in Q1 of the next fiscal. "That the MPC unanimously decided to maintain the repo rate at 5.5% reflects a cautious stance amid ongoing global uncertainties, including the impact of trade tensions and tariff wars. With most rate cuts already frontloaded, the Reserve Bank has chosen to pause and assess incoming data before making further moves. The committee also reaffirmed its neutral policy stance, signaling a balanced approach to managing inflation and supporting growth," Ghosh said. Describing the current pause as a "technical one", not ruling out the possibility of a future rate cut, he said it underlines that the bar for such a move in 2025 has now risen significantly. The inflation relief is temporary as it is expected to rise sharply to 4.9% in Q1 FY27. This trajectory keeps inflation in the 'uncertain band,' making the RBI wary of acting too soon and risking a reversal later, he said, adding with a large portion of rate easing has already been front-loaded, and leaves limited room for further accommodation, unless there's a major shift in inflation or growth trends, the central bank has little incentive to act quickly. In a note, Aditi Nayar, the chief economist at Icra Ratings, said the status quo policy was a surprise to her as she was expecting a 25 bps cut. "The strong emphasis on the CPI inflation estimates of over 4% from Q4FY26 onwards limits the space for rate cuts in the upcoming policy meetings, thereby signalling the beginning of an extended pause. We currently expect the policy rates to remain unchanged in the October policy review, unless there are large surprises on the growth front, which lead to a material cut in growth projections,' Nayar said.
