RBI Policy Review

RBI cuts policy interest rate by 50 bps

The Reserve Bank of India (RBI) seal is pictured on a gate outside the RBI headquarters in Mumbai October 29, 2013. REUTERS/Danish Siddiqui/Files

The Reserve Bank of India cut its policy interest rate to a 4-1/2 year low of 6.75 percent on Tuesday, in a bigger-than-expected move that, with inflation running at record lows, could help an economy in danger of slowing down.  Full Article 

A man exchanging damaged Indian currency counts 100 rupee notes along a roadside in Kolkata August 30, 2013. REUTERS/Rupak De Chowdhuri/Files

'50 bps rate cut due to slowing global economy'

Reserve Bank of India (RBI) Governor Raghuram Rajan said one of the most important factors behind its larger-than-expected 50 basis points rate cut on Tuesday was slowing global economic growth. The comments came after the RBI cut its policy interest rate to a 4-1/2 year low of 6.75 percent on Tuesday.  Full Article 

Finance Minister Jaitley welcomes RBI rate cut
FM On RBI Decision

Finance Minister Jaitley welcomes RBI rate cut

Finance Minister Arun Jaitley welcomed the Reserve Bank of India's 50 basis points cut in interest rates on Tuesday, saying it would boost confidence and economic growth. The decision would also provide policy support, Jaitley told reporters, adding that the government was committed to meeting its fiscal deficit targets.  Full Article 

Finance Minister Arun Jaitley (L) and Reserve Bank of India (RBI) Governor Raghuram Rajan attend a convocation ceremony for students at a university in Mumbai January 9, 2015. REUTERS/Shailesh Andrade/Files
Targeting Bank Rates

RBI to ensure rate cut benefits passed on

The Reserve Bank of India (RBI) will work with the government to ensure that the benefits of a cut in the policy interest rate is passed on by commercial banks through reductions in their lending rates, RBI Governor Raghuram Rajan said on Tuesday. Rajan also said the RBI is comfortable with inflation levels with food prices continuing to fall.  Full Article 

A stock broker reacts as he watches the screen at a brokerage firm in Mumbai October 30, 2006. REUTERS/Prashanth Vishwanathan/Files
Expert Views

RBI rate cut positive for growth and markets

"The extent of the cut was higher than market consensus, suggesting that RBI sees underlying growth trends as still subdued enough to require more aggressive stimulus. It also suggests that inflation is not the key risk at this time, in the RBI's view," says Atsi Sheth, Associate Managing Director, Sovereign Risk Group, Moody's Investors Service, Singapore. Click for more comments:  Full Article 

A saleswoman keeps a gold necklace in a shelve at a showroom in Mumbai, August 13, 2015. REUTERS/Shailesh Andrade/Files

Falling commodities helped front-load cuts: RBI

A substantial fall in global commodity prices allowed the Reserve Bank of India (RBI) to front-load interest rate reductions with a better-than-expected 50 basis point cut on Tuesday, RBI Governor Raghuram Rajan said on Tuesday. He however cautioned that India would have to steer through "tubulent waters" for a while longer.  Full Article 

A labourer works at the construction site of a residential complex in Noida on the outskirts of New Delhi, August 20, 2015. REUTERS/Adnan Abidi/Files

Jaitley says will reassess 2015/16 GDP forecast

Finance Minister Arun Jaitley said on Tuesday he would reassess the official gross domestic product forecast for Asia's third-largest economy in the current fiscal year that ends next March. The government now forecasts that the economy would achieve real growth of around 8 percent in the 2015/16 fiscal year.  Full Article 

A labourer carries a sack of onions at a vegetable market in Kolkata, August 12, 2015. REUTERS/Rupak De Chowdhuri/Files

Household inflation expectation stays high - RBI

Indian households expect consumer inflation to remain in double digits over the next three months and the next year, according to a quarterly survey by the central bank on Tuesday, even as recent data showed retail prices have remained muted.  Full Article 

What Governor Rajan Said

  • We want to encourage faster transmission and will do what is needed
  • Intent is to create more room steadily in India's debt markets for foreign investors
  • We will see if we have greater comfort on inflation going ahead
  • Intent is to keep money market rate close to policy rate, supply liquidity which is needed

RBI Policy - Important Points

50 bps rate cut frontloaded to ensure real interest rates at about 1.5-2.0 pct on one-year treasury bill

  • Foreign investment cap in govt bonds to be relaxed in phases to 5 pct of outstanding bond stock by March 2018
  • Broad framework of electronic trading platform for repo in corporate bonds to be launched
  • Companies allowed to issue rupee denominated bonds with minimum 5 year maturity offshore within $51 billion limit
  • Increase in foreign investment limit in bonds to be announced every March, September and released every quarter
  • Increase in foreign investment limit in bonds to be announced every March, September and released every quarter