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India central bank's operations to keep overnight rates within policy corridor, analysts say

Economic Times

Economic Times · 2m ago

India central bank's operations to keep overnight rates within policy corridor, analysts say

The Reserve Bank of India is managing liquidity withdrawal to maintain overnight interbank lending rates within the policy corridor, according to analysts. Recently, it withdrew ₹1 lakh crore ($11.7 billion) through a reverse repo operation. The RBI's policy repo rate stands at 5.50%, while the standing deposit facility rate is 5.25%. Analysts believe that the central bank aims to keep overnight rates closer to the SDF rather than pushing them towards the repo rate, allowing for effective policy transmission.

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RBI may soon step in to absorb excess liquidity

Economic Times

Economic Times · 2m ago

RBI may soon step in to absorb excess liquidity

The Reserve Bank of India (RBI) is planning to initiate variable rate reverse repo (VRRR) operations to manage surplus liquidity in banks, following its shift to a neutral policy stance. This move aims to stabilize short-term rates within the liquidity adjustment facility corridor. Economists believe restarting VRRR operations would help maintain market integrity. While no final decision is made, these operations could temporarily underscore the RBI's neutral stance until satisfactory rate transmission and a nearing end of the rate cut cycle.

RBI holds rates as expected, shifts stance to 'neutral'

VCCircle

VCCircle · 11m ago

RBI holds rates as expected, shifts stance to 'neutral'

- RBI keeps key interest rate unchanged at 6.50% for the tenth consecutive policy meeting - The policy stance is changed from "withdrawal of accommodation" to "neutral" - Five out of six members of the Monetary Policy Committee vote in favor of holding rates - Annual retail inflation remains below the central bank's target of 4%, standing at 3.65% in August - Manufacturing and services PMI indicators show a slowdown in economic growth - Overall growth in India slows to 6.7% in the June quarter

Festive-season boost: Rate-cut transmission to get a push as banking gets Rs 62,000 cr

Economic Times

Economic Times · 5d ago

Festive-season boost: Rate-cut transmission to get a push as banking gets Rs 62,000 cr

The banking system in India is experiencing a liquidity surplus, aided by a reduction in the cash reserve ratio (CRR) that will inject ₹62,000 crore ahead of the festive season. This move, part of the central bank's monetary strategy, is expected to facilitate the transmission of previous policy rate cuts, boost economic activity, and potentially lead to lower lending and deposit rates. Banks might channel the additional funds into fresh lending, enhancing economic growth.

RBI expected to maintain policy rates amid US tariff concerns and trade deal uncertainty

Economic Times

Economic Times · 1m ago

RBI expected to maintain policy rates amid US tariff concerns and trade deal uncertainty

The Reserve Bank of India (RBI) is anticipated to keep policy rates unchanged, as per an ET poll of economists. Out of 16 economists, 12 expect the repo rate, currently at 5.5%, to remain stable. Economic uncertainties from US tariffs and pending trade deals contribute to this expectation. However, some analysts predict a possible rate cut due to low retail inflation. Barclays and Nomura foresee potential rate cuts in upcoming months, despite retaining growth forecasts.

RBI holds interest rates steady yet again to keep inflation in check

VCCircle

VCCircle · 9m ago

RBI holds interest rates steady yet again to keep inflation in check

The Reserve Bank of India (RBI) has decided to keep its key interest rate unchanged at 6.50%. This decision was based on concerns over high inflation and disappointing economic growth. India's annual retail inflation rose to 6.21% in October, surpassing the central bank's tolerance band. Additionally, the country's GDP growth for the July-September quarter was the slowest in seven quarters at 5.4%. Investors will now be monitoring the RBI for any steps taken to address the liquidity deficit in the banking system, which could potentially lower market interest rates.

Fed holds rates steady, sees just one cut in 2024 despite inflation progress

Livemint

Livemint · 1y ago

Fed holds rates steady, sees just one cut in 2024 despite inflation progress

The US Federal Reserve has decided to keep interest rates steady and delayed rate cuts until later in the year. Previously, the Fed had projected three quarter-percentage-point reductions, but this has now been reduced to a single reduction. The decision comes as the Fed acknowledges progress towards its inflation target, but also raises estimates for the necessary actions to control inflation. The central bank's new projections show a higher long-run interest rate, indicating a need for more restraint to combat rising prices.

Most Gulf central banks follow US Fed in cutting key interest rates

VCCircle

VCCircle · 8m ago

Most Gulf central banks follow US Fed in cutting key interest rates

Following the US Federal Reserve's decision to cut interest rates, most central banks in the Gulf Cooperation Council (GCC) countries have also lowered their key interest rates. Saudi Arabia, the largest economy in the region, reduced its repo and reverse repo rates by 25 basis points. The United Arab Emirates decreased its base rate on the overnight deposit facility by a quarter of a percentage point. Other countries, such as Oman, Qatar, and Bahrain, also implemented rate cuts. These moves align with the GCC's practice of pegging their currencies to the US dollar.

India's appeal for investors dimmed but not derailed by conflict with Pakistan

VCCircle

VCCircle · 4m ago

India's appeal for investors dimmed but not derailed by conflict with Pakistan

India's investor appeal faces minor setbacks due to tensions with Pakistan, yet remains resilient with limited trade ties and unaffected markets. Historical conflicts rarely have long-term impacts on Indian assets. Despite geopolitical tensions, local investment flows offer market support. India's robust economic growth, recent trade deals, and central bank's policies bolster its global investment appeal. Analysts suggest that immediate jitters won't dent India's medium-term economic attractiveness. Investment centers in central and southern India are unaffected by border tensions.

Paytm confirms resignation of independent director at banking arm

Economic Times

Economic Times · 1y ago

Paytm confirms resignation of independent director at banking arm

Manju Agarwal has resigned as an independent director from the board of Paytm Payments Bank due to personal commitments. Paytm recently announced the formation of an advisory committee on compliance and regulatory matters following the central bank's order to wind down most of the bank's operations.

India bonds flat ahead of weekly debt supply

Economic Times

Economic Times · 12d ago

India bonds flat ahead of weekly debt supply

Indian government bonds remained steady as traders awaited a major debt sale of 320 billion rupees ($3.66 billion). The benchmark 10-year bond yield slightly declined from its previous high, standing at 6.5926%. Concerns persist about oversupply and demand dynamics amid hopes for central bank intervention. Short-end overnight index swap rates dipped, reflecting expectations of intervention. The market faces pressure from increased government debt supply following GST cuts, impacting fiscal stability.

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