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Business Standard
2 days ago
- Business
- Business Standard
5 key takeaways from RBI MPC June meet: Rate cut, CRR, inflation and more
RBI MPC's latest decisions come amid easing inflationary pressures and continued challenges to economic growth. Here are the highlights from the central bank's June policy meet Vasudha Mukherjee New Delhi The Reserve Bank of India (RBI) Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, concluded its 55th meeting on June 6, announcing a major 50 basis point cut in the key policy repo rate to 5.5 per cent. The committee also shifted its policy stance from 'accommodative' to 'neutral' and revised its inflation outlook downwards for FY26. The latest decisions come amid easing inflationary pressures and continued challenges to economic growth. The majority of MPC members supported the 50 bps cut, while one member, Saugata Bhattacharya, backed a smaller 25 bps reduction. RBI monetary policy meeting june 2025 key takeaways 1: Repo rate cut by 50 bps The policy repo rate was reduced by 50 basis points to 5.5 per cent, with immediate effect. Consequently, the Standing Deposit Facility (SDF) rate now stands at 5.25 per cent, while both the Marginal Standing Facility (MSF) rate and the Bank Rate have been adjusted to 5.75 per cent. The MPC cited softening inflation and the need to support private consumption and investment as key reasons for front-loading the rate cut. While a rate cut had been expected after the RBI shifted its stance to accommodative in the April meeting, experts had anticipated a 25-basis point cut, as the RBI had done in the previous two meetings. 2: Change in policy stance to 'Neutral' Alongside the rate cut, the MPC changed its policy stance to neutral from accommodative. The committee said that with limited space left for further monetary easing, it will now adopt a data-dependent approach to ensure a balanced response to evolving inflation and growth dynamics. 3: Inflation forecast lowered The headline CPI inflation for FY26 is now projected at 3.7 per cent, revised down from the earlier forecast of 4 per cent made in April 2025. This outlook assumes a normal monsoon and is supported by moderating food inflation, contained core inflation, and softening global commodity prices. 4: GDP growth projection maintained at 6.5 per cent The RBI has maintained its real GDP growth forecast for FY26 at 6.5 per cent. This is based on sustained momentum in private consumption, investment, and services sector activity, despite global uncertainties. 5: Cash Reserve Ratio lowered to 3 per cent Following the MPC meet, the RBI announced a 100 basis point reduction in the Cash Reserve Ratio (CRR), lowering it to 3 per cent from 4 per cent. This reduction was aimed at enhancing liquidity in the banking system and improving the transmission of monetary policy. The reduction will be implemented in four equal tranches of 25 basis points each, commencing from September 6, 2025, and concluding on November 29, 2025. This phased approach is expected to inject approximately ₹2.5 trillion into the banking system by the end of November 2025. Growth stable, inflation eases The MPC noted that while growth remains 'lower than aspirations', inflation has significantly eased from above the upper tolerance band in late 2024 to well below the target by April 2025. The committee emphasised the need to support domestic growth through policy tools amid heightened global uncertainty. The next meeting is scheduled from August 4 to 6, 2025.
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Business Standard
05-05-2025
- Business
- Business Standard
Chinese exporters turn to 'origin washing' to dodge steep Trump tariffs
Chinese exporters are using repackaging, mislabeling, and rerouting tactics to avoid steep Trump-era tariffs, raising alarm across Asian trade hubs and customs agencies Vasudha Mukherjee New Delhi As US President Donald Trump intensifies trade restrictions on China, Chinese exporters are resorting to increasingly sophisticated — and often illicit — methods to bypass them. After Washington imposed tariffs of up to 145 per cent on imports from China, reports of origin washing, rerouting, and product mislabeling have surged. Social media ads offer 'origin washing' services According to a report by the Financial Times, Chinese social media platforms are now filled with ads offering 'place-of-origin washing' services. These include repackaging goods, relabeling items, and producing fake certificates of origin to help products enter the US market while evading tariffs. One exporter from a southern China lighting firm said companies are rerouting shipments through countries like Vietnam or Malaysia. Under 'free on board' (FOB) terms, liability transfers to the buyer once the goods leave port, shielding the exporter from legal exposure. How origin washing works: A look at the grey market workaround Origin washing refers to disguising the true country of origin of goods. To qualify for a new origin under US law, products must undergo substantial transformation, adding material value. However, many Chinese exporters are now lightly modifying or simply repackaging goods in third countries, then exporting them as 'Made in Vietnam' or 'Made in South Korea.' These services often include: Document preparation Local warehousing Coordination with proxy factories New certificates of origin South Korea flags $21 million in false 'Korean-made' exports In Q1 2025 alone, South Korea's customs agency reported nearly $21 million worth of falsely labeled exports, nearly equaling the total for all of 2024. Most were Chinese goods destined for the US. Other countries are also reacting. Vietnam and Thailand have tightened scrutiny on raw material origins Malaysia and China have not yet issued formal comments Trump's tariff escalation squeezes Chinese exporters Trump's aggressive trade policies, including 'reciprocal tariffs' announced on April 2, have dealt a heavy blow to Chinese manufacturers. The pressure is especially intense for small and mid-sized firms dependent on US buyers. Unable to absorb the full brunt of tariffs, they are increasingly drawn to grey-area workarounds. US-China trade tensions show no signs of slowing While Beijing has acknowledged receiving a US request for trade talks, the situation remains tense. Retaliatory measures from both sides have created a volatile climate for global supply chains, especially in electronics, textiles, and light manufacturing.
