Rate transmission uneven despite liquidity comfort

Live Events
(You can now subscribe to our
(You can now subscribe to our Economic Times WhatsApp channel
Mumbai: Banks appear to have largely looked through improving system liquidity and policy rate cuts while reducing the cost of borrowing for those taking loans tied to the lenders' internal benchmarks. Rates have reduced by only 5-15 bps for existing borrowers on loans tied to marginal cost of funds-based lending rate, even as liqudity turned into a surplus, and the central bank cumulatively cut policy rates by half a percentage point since February."I think the market rates will remain dynamic for some time before they settle," Amitabh Chaudhry, MD, Axis Bank , had said during the earnings call. "It was something similar when the rate started going up. You will see something similar when the rates are going down. So, it is pretty much a part of the normal playout of this activity over the next couple of quarters." In response to the cumulative 250 basis point rate increase during the last tightening cycle, between May 2022 and September 2024, the one-year median MCLR rose 170 basis points.The weighted average lending rate on fresh and outstanding rupee loans increased 186 basis points and 116 basis points, respectively, during this period. Last week, several major banks made modest adjustments to their lending rates. HDFC Bank , India's most-valued lender, reduced its one-year MCLR by 15 bps, from 9.30% to 9.15%. Liquidity in system has improved since April. Daily average surplus liquidity stood at ₹1.4 lakh crore in April and ₹1.3 lakh crore as of May 8. March saw an average daily deficit of ₹1.23 lakh crore.The WALR on outstanding rupee loans declined by 10 bps as of March. In case of fresh loans, it has increased reflecting the significant proportion of MCLR-linked loans in it, given the longer reset period, it may undergo adjustments with some lag, experts say."Uneven pace of rate transmission is due to mix of credit portfolios across fixed and floating rate structures, and varied spreads by banks," said Aastha Gudwani, India chief economist at Barclays.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Time of India

an hour ago

• Time of India

Tesla stock skyrockets as first robotaxis hit Austin streets, kicking off the future of self-driving rides

What's driving the Tesla stock price up today? How did the market react to the Tesla robotaxi launch? Live Events What exactly is Tesla's new robotaxi service in Austin? How does Tesla's robotaxi differ from other self-driving cars? Could Tesla robotaxis become the future of self-driving transportation? Could Tesla stock go higher from here? What should Tesla investors watch next? Expansion : Will Tesla roll the robotaxi service out to more cities this year? : Will Tesla roll the robotaxi service out to more cities this year? Safety : Any incident could shake investor confidence quickly. : Any incident could shake investor confidence quickly. Regulation : What decisions will state and federal transportation bodies make? : What decisions will state and federal transportation bodies make? Monetization : Can Tesla actually generate recurring revenue from this service? : Can Tesla actually generate recurring revenue from this service? FSD adoption: Will more owners pay for Full Self-Driving if it proves reliable in Austin? FAQs: (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Tesla stock surged on Monday after the company officially launched its first fleet of robotaxis in Austin, Texas. Shares of TSLA jumped nearly, closing in on, following the rollout of autonomous Model Y vehicles operating within a controlled zone. This move marks a major step toward Tesla's long-term vision of building a driverless ride-hailing to aroundduring mid-day trading, up from a previous close of, according to Yahoo Finance. That jump added billions to Tesla's market cap in just a few hours, as investors rushed to price in the massive long-term potential of autonomous boost in Tesla stock price came as aboutbegan offering rides at a flat rate ofacross central Austin. The rides are fully autonomous and part of a limited test. Passengers can hail these robotaxis using the Tesla app, with no safety drivers onboard. While the routes are currently geofenced, Elon Musk plans to expand to other cities like Los Angeles and San Francisco in the coming analyst Dan Ives, who took one of the first rides, called it a 'historic moment,' backing a bullish $500 price target. In contrast, UBS analyst Joseph Spak remained cautious, raising his target from $160 to $215, but kept a Sell rating, saying much of the hype is already priced stock responded fast and furious. By mid-day,, trading at, up fromat Friday's close. Volume also spiked, with overchanging excitement came not just from the novelty of the robotaxi launch, but from the broader implications for Tesla's business model. Tesla is aiming to shift from selling cars to offering mobility services, a market that analysts say could be worth hundreds of billions of dollars by Ives, a well-known Tesla bull and analyst at Wedbush, even took a ride himself. He called the launch a 'historic moment' and said the robotaxi service 'could mark the start of a golden age for Tesla.' He kept his Outperform rating and raised his price target to $ all analysts are as bullish, though. UBS analyst Joseph Spak raised his price target from $147 to $215, but maintained a Sell rating, warning that a lot of optimism is already 'baked into the stock.'In a quiet but bold move, Tesla rolled out its first batch of robotaxis—modified Model Y vehicles—on the streets of Austin over the weekend. According to The Washington Post, the pilot includes 10 to 20 vehicles, operating within a geofenced zone, and charging $4.20 per ride, a figure that appears to nod to Elon Musk's familiar meme-driven competitors like Waymo or Cruise, which use lidar sensors and remote monitoring, Tesla's robotaxis run entirely on camera-based Full Self-Driving (FSD) software. That's a bold bet, especially with no remote oversight during rides. While this cuts costs and aligns with Tesla's long-held software-first strategy, it also raises concerns about safety and to the Washington Post, the National Highway Traffic Safety Administration (NHTSA) is already reviewing the Austin program. Meanwhile, a new Texas law requiring permits for AV services will kick in by September, adding another layer of successful, Tesla's plan could reshape the company's business model—shifting from selling cars to offering ride-hailing as a service. Elon Musk has stated his goal is to roll outby 2026. Tesla also aims to let private owners add their cars to the robotaxi network, potentially turning idle vehicles into income-generating there are challenges ahead. Scaling the service, winning regulatory approval, and proving consistent safety at scale will be critical. Analysts say if Tesla clears those hurdles, the company could tap into aThat's the billion-dollar question. Theis now testing new resistance levels, and bulls are hoping that the robotaxi launch will be the catalyst that brings in a wave of institutional Musk has promised aof autonomous vehicles for years. If the Austin launch succeeds and Tesla expands robotaxis into other cities like, and, the company's value could multiply. Musk has even claimed that individual Tesla owners will eventually be able to add their cars to the fleet and earn passive income when not in there are National Highway Traffic Safety Administration (NHTSA) is already reviewing the Austin service, and Texas state regulations requiring robotaxi permits will go into effect by September 2025. Any serious accident or regulatory pushback could stall Tesla says it plans to deploy hundreds of thousands of robotaxis by 2026, though no official timeline has been you own or are eyeing, here's what to keep an eye on:Tesla stock rose after launching its first robotaxi service in stock is currently around $354 after the robotaxi launch.

Time of India

3 hours ago

• Time of India

'I'm watching': Trump warns oil producers not to hike prices amid fears of closure of Strait of Hormuz by Iran

US President Donald Trump on Monday issued a sharp warning to global oil producers over rising prices, urging them to hold back any move that could increase costs for consumers. This comes amid growing aarket concerns over the potential fallout from America's direct military involvement in Israel's war with Iran. 'EVERYONE, KEEP OIL PRICES DOWN. I'M WATCHING! YOU'RE PLAYING RIGHT INTO THE HANDS OF THE ENEMY. DON'T DO IT!' Trump posted on Truth Social , a day after U.S. bunker-busting strikes reportedly targeted Iranian-linked sites. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like If You Eat Ginger Everyday for 1 Month This is What Happens Tips and Tricks Undo 'To The Department of Energy: DRILL, BABY, DRILL!!! And I mean NOW!!!' Trump wrote in another post. Despite the sharp rhetoric, global markets showed a cautious but measured response. Oil prices, which spiked as much as 4% after trading opened Sunday night, pared back by Monday morning. A barrel of U.S. benchmark crude was up just 0.4% at $74.16, while Brent crude edged up 0.2% to $77.17. Live Events The relatively muted reaction reflects market expectations that Iran may avoid retaliatory actions that could block the Strait of Hormuz , a key maritime corridor for global oil shipments. Still, oil remains significantly higher than it was before the conflict began last week, when U.S. crude hovered near $68. U.S. Secretary of State Marco Rubio said any attempt by Iran to block the strait would be 'economic suicide' and would draw a response from Washington.

First Post

4 hours ago

• First Post

Kharg Island: The oil nerve Israel won't touch, yet

Despite multiple strikes on Iran's energy infrastructure, Israel has avoided targeting Kharg Island, Tehran's most critical oil export terminal, which analysts warn could severely cripple Iran's oil-dependent economy, according to a report read more Kharg Island serves as Iran's main oil export terminal, managing over 90% of the nation's crude oil exports. Despite multiple strikes on Iran's energy infrastructure, Israel has avoided targeting Kharg Island, Tehran's most critical oil export terminal, which analysts warn could severely cripple Iran's oil-dependent economy, according to an Economic Times report. In recent operations, Israel has reportedly struck multiple Iranian energy sites, including the Shahran fuel and gasoline depot, home to at least 11 storage tanks, as well as the Shahr Rey refinery, one of Iran's largest. The South Pars Gas Field, a cornerstone of Iran's energy production and among the largest in the world, has also been targeted. STORY CONTINUES BELOW THIS AD Kharg Island, however, remains untouched. Located in the Persian Gulf, the island handles the bulk of Iran's crude oil exports and is considered one of the most sensitive and strategically important sites in the country's energy sector. During the Iran-Israel conflict in October last year, reports emerged that Israel was considering a strike on Kharg. The speculation was enough to prompt the temporary withdrawal of several oil tankers from the waters surrounding the terminal — a clear sign of the potential fallout of such an escalation. According to Reuters, citing Homayoun Falakshai, head of crude oil analysis at tracking firm Kpler, all of the loadings from Kharg Island last week took place from the site's eastern jetty. Local reports have also suggested that oil loadings are being redirected to the eastern jetty on the island, believed to be safer than the exposed western jetty. Iran is ramping up exports at a feverish pace, averaging 2.23 million barrels per day in the first five days after Israel's latest military campaign. That's a 44 per cent jump from prior levels. 'NIOC may believe it is less risky than the other main jetty located on the western side, in open waters,' Reuters quoted Falakshai as saying, referring to Iran's state oil firm National Iranian Oil Co. STORY CONTINUES BELOW THIS AD Large oil tankers have been arriving at Kharg Island one at a time, leaving the western jetty unused for several days, while 15–16 other Iranian tankers remain scattered across the wider Persian Gulf, according to a Bloomberg report. The island is seeing intense activity as Iran accelerates oil exports to secure revenues amid fears of potential disruption. Unlike normal operations, many tankers are now anchoring farther offshore and making only quick stops to load before rapidly departing the area, added the report. Iran's exports surged after Israel launched its offensive. In the first five days of the campaign, Iran exported an average of 2.23 million barrels of oil per day, a 44% increase from previous levels. Were Kharg Island to be targeted this time, Iran would lose a key source of revenue but then have little reason not to strike back in kind. Why Kharg terminal matters Located off Iran's coast near Bushehr and close to the strategic Strait of Hormuz, Kharg Island is the country's main offshore oil export hub. STORY CONTINUES BELOW THIS AD Built in the 1950s and rebuilt after sustaining heavy damage during the Iran–Iraq war, the terminal is equipped to handle the world's largest oil tankers, including VLCCs and ULCCs. With multiple berths capable of loading 8–9 supertankers simultaneously and a storage capacity of around 28 million barrels, Kharg is a critical node in Iran's oil infrastructure. Over 90% of Iran's crude oil exports pass through Kharg, fed by a vast pipeline network from the country's main oil fields. In a heavily sanctioned economy, Kharg's output provides a vital stream of hard currency, helping fund Iran's national budget and geopolitical ambitions. Its proximity to the Strait of Hormuz — the world's most important oil chokepoint — adds strategic significance, giving Iran leverage over global energy flows. Despite sanctions limiting Iran's overall oil production, any major disruption at Kharg could trigger global market instability, pushing up oil prices and raising fears about the security of supply from the Persian Gulf. STORY CONTINUES BELOW THIS AD Striking Kharg high-stakes gamble In October 2024, amid soaring tensions between Iran and Israel, speculation swirled that Israel might target Kharg Island, Iran's most critical oil export terminal. Iranian oil officials made high-profile visits to the island, and tankers were seen leaving the area as security alerts intensified. Although no strike took place, the episode highlighted both Kharg's vulnerability and its central role in Iran's strategic and economic calculus. In this conflict, Israel has launched multiple strikes on Iranian energy assets, including the South Pars gas field. Yet despite Kharg's strategic significance, Israel has so far held back from targeting it. A direct hit on Kharg would not only devastate Iran's oil exports but could also provide Tehran with justification to disrupt or block traffic through the Strait of Hormuz, a narrow chokepoint that handles roughly 20% of the world's oil supply. Such a move would have far-reaching consequences, sending global oil prices soaring and destabilising energy markets and shipping routes, reported Economic Times. STORY CONTINUES BELOW THIS AD According to the report, the stakes of striking Kharg extend beyond Iran. A move that bold could provoke Tehran to retaliate against oil infrastructure in neighboring Gulf states, such as Saudi Arabia's Ras Tanura terminal, potentially drawing the region into a broader conflict. The resulting escalation could spiral into a full-scale war, pulling in more actors and further destabilising the West Asia, added the report. Israel's current strategy appears to favour calibrated pressure: striking key energy and nuclear-related sites while avoiding actions that could trigger uncontrollable escalation or alienate international allies. This measured approach suggests that Kharg remains a deliberate red line, the Economic Times reported. While Iran has worked to build redundancy through facilities like the Jask terminal on the Gulf of Oman and offshore tanker-based storage, Kharg remains its economic lifeline. Any disruption there would have a cascading effect on global oil flows. For energy-importing nations and market watchers, even the threat of an attack on Kharg causes price volatility and raises geopolitical risk premiums. STORY CONTINUES BELOW THIS AD In short, Kharg is not just an oil terminal, it is the heart of Iran's export economy and a geopolitical flashpoint. For now, Israel appears to recognise that attacking it would carry consequences too great to risk. With inputs from agencies