Interest Rate in India
India - Interest Rate
Reserve Bank of India chops rates in June
As expected by market analysts, the Reserve Bank of India’s Monetary Policy Committee (MPC) cut all monetary policy rates by 0.25 percentage points at its 4–5 June meeting, reducing the repo rate to 5.75%, the marginal standing facility to 6.00% and the reverse repurchase rate to 5.50%. This decision was unanimous among MPC members. The MPC also voted unanimously to change the official monetary policy stance from “neutral” to “accommodative”.
June’s decision was primarily influenced by economic growth and inflation considerations. First, GDP growth slowed sharply in the last three months of FY 2018, which ran from April 2018 to March 2019, and the MPC revised down its economic growth forecast for FY 2019 to 7.0% from 7.2%. In addition, consumer price inflation remained steady in April at 2.9%, marking the ninth consecutive month that inflation was below the 4.0% midpoint of the MPC’s target range of 2.0% to 6.0%. The MPC raised its inflation projection for H1 FY 2019 to 3.0–3.1% from 2.9–3.0%, and lowered its projection for H2 to 3.4%–3.7% from 3.5–3.8%. Slower domestic economic growth, tame inflation and the uncertain global economic backdrop further prompted the MPC to cut interest rates in June.
Reflecting on the cut, analysts at Nomura noted that the new “accommodative stance suggests the RBI has become more concerned about the growth slowdown […] We believe the RBI’s growth projections remain optimistic […] but we are broadly in agreement with the RBI’s inflation trajectory. Given the recent stress among shadow banks, which nearly resulted in the default of one of the beleaguered entities, financial stability risks remain elevated […] We believe the shift to an “accommodative” stance could hint at further easing ahead”.
The next monetary policy meeting is scheduled for 5–7 August.
Our complete range of Consensus Forecast panelists are currently reviewing their forecasts.
India - Interest Rate Data
|Policy Interest Rate (%)||8.00||7.50||6.75||6.25||6.00|
5 years of economic forecasts for more than 30 economic indicators.
India Interest Rate Chart
Source: Reserve Bank of India.
|Bond Yield||6.79||-0.04 %||Jun 20|
|Exchange Rate||69.52||-0.09 %||Jun 20|
|Stock Market||39,602||-0.08 %||Jun 20|
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June 14, 2019
Annual merchandise export growth accelerated to 3.9% in May, up from the 0.6% growth in April.
June 12, 2019
Industrial production increased 3.4% in April in annual terms, up from March’s revised 0.4% increase (previously reported: -0.1% year-on-year) and marking the fastest pace of growth in six months.
June 12, 2019
In May, consumer prices rose 0.57% compared to the previous month, matching April’s figure.
June 6, 2019
As expected by market analysts, the Reserve Bank of India’s Monetary Policy Committee (MPC) cut all monetary policy rates by 0.25 percentage points at its 4–5 June meeting, reducing the repo rate to 5.75%, the marginal standing facility to 6.00% and the reverse repurchase rate to 5.50%.
June 5, 2019
The composite Purchasing Managers’ Index (PMI) produced by Nikkei and IHS Market was unchanged in May at April’s 51.7.