RBI announces 50 bps Rate Cut; FM welcomes

The Union Finance Minister Shri Arun Jaitley said that the Government welcomes the Reserve Bank of India (RBI)’s decision to reduce the repo rate to 6.75 percent from 7.25 percent. The Finance Minister was responding to the Monetary Policy announcement made by the Reserve Bank of India today.

The Finance Minister said that constant vigilance is warranted on the inflation front, this action signals that inflationary pressures have moderated significantly and are within the RBI’s comfort zone. He said that the Government is committed to meet its fiscal deficit target to consolidate the gains achieved in reducing the inflation.

The Finance Minister Shri Jaitley further said that this action also signals that the RBI is able to provide policy support to the real economy and help its recovery. He said that the Government looks forward to the transmission of these cuts to the rest of the economy and will work to facilitate this transmission, including by reviewing the framework of small savings. Shri Jaitley said that the rate cut, combined with actions taken and planned by the Government, will help boost confidence and investment, and help realize the economy’s medium-term potential growth rate.

The Finance Minister Shri Jaitley further said that Indian corporates would now be able to raise External Commercial Borrowings (ECB) through rupee denominated offshore bonds with no end use restrictions. He concluded that this would provide additional source of raising resources which would be fully hedged as they are denominated in rupees.

Shri Shaktikanta Das, Secretary, Department of Economic Affairs (DEA), Ministry of Finance said that the Medium Term Framework for FPI investment in Government Securities would bring in predictability for foreign investors. He said that the limits would be increased from existing 3.8% to 5% of the outstanding stock of Government Securities by March 2018 implying increase by about Rs 1,20,000 crore from the existing limit of Rs 1,53,500 crore.

Shri Das said that in the current financial year, Rs.26,000crore would flow in the Government Securities. He said that the increase in FPI limits would bring in greater foreign participation with predictability and would result in higher liquidity in the Indian Government Securities market. He said that for State Development Loans, FPI limits have been fixed for the first time at 2% of the outstanding stock that would amount to about Rs 50,000 crore by March 2018 and Rs.7,000 crore would flow in State Government Securities during the Current Financial Year. This would bring higher liquidity in these State Government bonds.

The Chief Economic Adviser Dr Arvind Subramanian said that the transmission of rate cut is partly by the banks and partly by the market rates coming down. He reiterated that the Government looks forward to the transmission of these cuts to the rest of the economy and will work to facilitate this transmission, including by reviewing the framework of small savings. He said that the Government would review the GDP rate target for the current Financial year after the figures of second quarter are available.

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RBI keeps Key Interest Rates Unchanged - Cuts SLR by 50 bps

The Reserve Bank of India (RBI) on Tuesday did not change the key interest rates as speculated. But, the apex bank cut the  statutory liquidity ratio (SLR) by 50 basis points. RBI kept the benchmark repurchase rate at 7.75 per cent.

Looking at the macro-economic indicators, it has been speculated by all that the RBI would cut the key interest rates while reviewing its credit policy for the month of January. But, there was not rate cut announcement by the apex bank that led to tumble the stock markets in India.

BSE Sensex fell by around 171 points and the Nifty down by 45 points. Investors were anticipated a rate cut but that was not happened as expected. The Governor of RBI Raghu Rajan said inflation was likely to at around 6 per cent by the end of January 2016 but other factors - monsoon and oil price could be great factors.

Bank stocks fell heavily following the no rate cut by the RBI today at BSE Sensex and Nifty. 

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RBI to review Credit Policy Tomorrow, Scope for Rate Cut?

Tomorrow, the Reserve Bank of India (RBI) will review credit policy, and speculations are buzzing around of possible rate cut. Headline inflation has been moderated, macro-economic indicators favor a rate cut.

Today stock markets ended in flat, BSE Sensex was down by 60 points at Nifty was down by 45 points. But, in the intra-day trading markets were down heavily following weak global cues.  Last week markets were full of volatile but gained by margin.

Tomorrow, the apex bank would review the macro-economic indicators and may come up with a rate cut announcement. Investors would be watching putting their fingers crossed. There are possibility of high returns from the market, if the apex bank favors a cut in the key interest rates  - repo rate, reverse repo rate and cash reserve ration.  On the contrary, the market would nose-dive, if there would not any rate cut announced by the apex bank.

Another big concern about the manufacturing sector's performance. The statistics issued by the government were not convincing for the investors to have confidence on the market. It may trigger a loss any time, and foreign investors would pull out their funds from the market.

In the international market, all the factors are conducing for a possible rate cut - oil prices are falling, EU announces stimulus - Greece issues also most solved, EU to host trade meet with India, China's economy has been growing slowly and the big thing is that India has become partner with US.

A perfect situation for the apex bank to consider for right move to keep the interest of the economy and investor. There is scope for possible rate cut tomorrow and if that happens so then markets would further touch to new high. Lets wait and watch - what RBI decides for us.

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RBI cuts repo-rate and CRR by 25bps

The Reserve Bank of India has cut the interest rate by 25 bps on Tuesday, as speculated. The Cash Reserve Ratio was also cut to 4 per cent from 4.5 per cent, by cutting down 25 bps.

The RBI has also cut the repo-rate by 25 basis points to 7.75 per cent from 8 per cent, for the first time since April 2012. The ease in the monetary policy will boost the Indian economy.

The cut in CRR will help to infuse around 1.80 billion rupees into the economy.

Speaking to media, the governor of RBI, Duvvuri Subbarao told that the soften in the headline inflation was the major factor leading for a cut in the interest rates by 25 basis points.

The headline inflation was at 8.1 per cent in the September 2012 and dropped to 7.2 per cent in December 2012.

The GDP was recorded 5.5 per cent in the first quarter and dropped to 5.3 in the second quarter.

The stock markets - BSE Sensex and NSE Nifty gained following the rate cut declared by the RBI.

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RBI Hikes Repo Rate to 5% and Reverse Repo Rate to 3.5%, Intereste Rates by 25 bps

RBI Hikes Repo Rate to 5% and Reverse Repo Rate to 3.5%, Intereste Rates by 25 bps

The Reserve Bank of India (RBI) has hiked the interest rates by 25 bps on Friday evening.


The hike by the RBI was unexpected, but the impact would be high on home loans and auto loans.

 Experts believer that the home loans and auto loans rates will go up following the hike in the interest rate by the Apex Bank.


The RBI has raised the benchmark short-term interest rates - repo (banks pay the repo rate to borrow from RBI) to 5 per cent from 4.75 per cent and reverse repo rates (banks receive parking surplus funds with RBI) to 3.5 per cent from 3.25 per cent. interest rate is the greatest instrument the RBI has to contain the inflation.

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