Latest news with #SanjayMalhotra
Reuters
an hour ago
- Business
- Reuters
India rate panel hopes to boost consumption, investment with large rate cut, minutes show
MUMBAI, June 20 (Reuters) - A big rate cut would assure stakeholders of India's focus on economic growth and aid in faster transmission while boosting investment and consumption, members of the monetary policy committee wrote in the June policy minutes published on Friday. Two weeks ago, the Reserve Bank of India cut its key repo rate by a larger-than-expected 50 basis points and slashed the reserve ratio for banks. It also changed its monetary policy stance to "neutral" from "accommodative", stating that room for further cuts was limited. "It is expected that the front-loaded rate action, along with certainty on the liquidity front, would send a clear signal to the economic agents, thereby supporting consumption and investment through lower cost of borrowing," RBI Governor Sanjay Malhotra wrote. All six members of the committee concurred that the fall in inflation in recent months had opened up policy space to support growth. However, only one of them - external member Saugata Bhattacharya - argued for pacing the rate cuts. "Continuing elevated uncertainty remains, to my mind, the primary reason to exercise caution in pacing monetary policy easing," wrote Bhattacharya, who voted for a 25-bp reduction. The RBI's assurance of continuing large durable liquidity support is likely to have a more dominant effect on further monetary transmission compared to a deep cut in the repo rate, he added. Retail inflation fell to 2.82% in May, the lowest in more than six years, staying below the central bank's 4% target for the fourth straight month as food prices eased. It is expected to largely remain subdued during the year. "..as monetary policy works with a lag, under the current circumstances, a 50-bp cut is preferable to two 25-bp cuts for faster and greater transmission," executive director and MPC member Rajiv Ranjan wrote in his minutes. Despite being one of the fastest-growing large economies, India can grow faster based on favourable demographics, conducive shift in regulatory policies, significant infrastructure enhancement, and leveraging on the macroeconomic stability achieved during the past decade, said RBI Deputy Governor Poonam Gupta, who was part of the MPC for the first time.
Time of India
an hour ago
- Business
- Time of India
RBI Governor pushes for growth-backed policies as global uncertainty clouds India's investment outlook: MPC minutes
RBI Governor Sanjay Malhotra cautioned that rising global uncertainty could postpone business investment decisions. He noted that post-COVID recovery has been driven by public investments, with private sector investment remaining weak despite favorable conditions. Malhotra emphasized the necessity of implementing policies that actively support economic growth in the face of these challenges. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Growth and inflation outlook Tired of too many ads? Remove Ads Rising global uncertainty may cause businesses to delay investment decisions, Reserve Bank of India Governor Sanjay Malhotra said, stressing the need for policies that support economic growth , in his statement, released on Friday, as a part of the minutes of the Monetary Policy Committee (MPC) meeting.'On the investment front, the post-Covid recovery so far has been largely led by public investments, while private sector investments have been weak despite high capacity utilisation and improved corporate balance sheets. Moreover, heightened global uncertainties may put on hold investment decisions by businesses, underscoring the need for growth supportive policies,' Malhotra its June meeting, the MPC decided to cut the benchmark repo rate by 50 basis points to 5.5%. The committee expects that this dual-rate cut will significantly reduce lending rates, thereby, encouraging both investment and consumption, particularly in durable the decision, Malhotra said, 'It is expected that the front-loaded rate action along with certainty on the liquidity front would send a clear signal to the economic agents, thereby supporting consumption and investment through lower cost of borrowing.'The RBI had earlier indicated that investment activity is likely to improve, supported by higher capacity utilisation, better corporate balance sheets across both financial and non-financial sectors, and continued capital expenditure by the the overall investment landscape remains uneven. 'Domestically, the recovery of economic growth to 7.4% in Q4:2025 from 6.4% in Q3:2025 was a pleasant surprise. It helped to close the year 2024-25 with 6.5% growth overall. However, the recovery has not been broad-based. It was supported by the rural consumption and government capex. Private investment, especially in manufacturing, and urban consumption, have continued to remain subdued,' said MPC member Nagesh Kumar in his added, 'It is not clear that the growth momentum will continue in the Q1 of the current year, given the fact that consumption and investment growth is moderating. The survey of corporate performance shows that companies are deleveraging their balance sheets with rising profits. Despite the capacity utilisation crossing beyond 75%, the investment intentions in manufacturing have moderated in 2025-26. The difficult external environment is likely to further complicate the economic growth outlook for 2025-26, especially for the manufacturing sector outlook, with implications for job creation. It calls for supporting growth through both fiscal and monetary policy.'Despite the concerns around external volatility, the RBI's rate-setting panel in its June MPC meeting retained its GDP growth forecast for FY26 at 6.5%, with quarterly estimates holding economy grew at 7.4% in the March quarter, marking the fastest pace in the past four quarters. However, the full-year FY25 growth settled at 6.5%, slightly below the average of recent years. Governor Malhotra had acknowledged persistent external challenges such as geopolitical conflicts and changing trade policies, but remained confident in the domestic economic momentum, supported by a strong monsoon forecast and continued strength in the services central bank maintained its quarterly growth projections for FY26 at 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4. 'Services sector is expected to maintain its momentum. However, spillovers emanating from protracted geopolitical tensions, and global trade and weather-related uncertainties pose downside risks to growth,' the MPC had added that the Indian economy is progressing well and largely in line with expectations, despite the headwinds from the global the inflation front, the RBI had revised its forecast downward for FY26 to 3.7%, from the earlier projection of 4% made in April. The downward revision came amid a sustained drop in price had highlighted that headline inflation fell to a nearly six-year low in April, driven by easing food prices and deflation in fuel. Core inflation remained stable despite global commodity market RBI's latest quarter-wise inflation projections were 2.9% for Q1, 3.4% in Q2, 3.5% in Q3, and 4.4% in Q4. The central bank had stated that risks to the inflation outlook were 'evenly balanced.'With inflation easing and the economy showing selective strength, the RBI and the MPC have chosen to support momentum while remaining cautious of evolving global dynamics.
Economic Times
2 hours ago
- Business
- Economic Times
RBI Governor pushes for growth-backed policies as global uncertainty clouds India's investment outlook: MPC minutes
RBI Governor Sanjay Malhotra cautioned that rising global uncertainty could postpone business investment decisions. He noted that post-COVID recovery has been driven by public investments, with private sector investment remaining weak despite favorable conditions. Malhotra emphasized the necessity of implementing policies that actively support economic growth in the face of these challenges. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Growth and inflation outlook Tired of too many ads? Remove Ads Rising global uncertainty may cause businesses to delay investment decisions, Reserve Bank of India Governor Sanjay Malhotra said, stressing the need for policies that support economic growth , in his statement, released on Friday, as a part of the minutes of the Monetary Policy Committee (MPC) meeting.'On the investment front, the post-Covid recovery so far has been largely led by public investments, while private sector investments have been weak despite high capacity utilisation and improved corporate balance sheets. Moreover, heightened global uncertainties may put on hold investment decisions by businesses, underscoring the need for growth supportive policies,' Malhotra its June meeting, the MPC decided to cut the benchmark repo rate by 50 basis points to 5.5%. The committee expects that this dual-rate cut will significantly reduce lending rates, thereby, encouraging both investment and consumption, particularly in durable the decision, Malhotra said, 'It is expected that the front-loaded rate action along with certainty on the liquidity front would send a clear signal to the economic agents, thereby supporting consumption and investment through lower cost of borrowing.'The RBI had earlier indicated that investment activity is likely to improve, supported by higher capacity utilisation, better corporate balance sheets across both financial and non-financial sectors, and continued capital expenditure by the the overall investment landscape remains uneven. 'Domestically, the recovery of economic growth to 7.4% in Q4:2025 from 6.4% in Q3:2025 was a pleasant surprise. It helped to close the year 2024-25 with 6.5% growth overall. However, the recovery has not been broad-based. It was supported by the rural consumption and government capex. Private investment, especially in manufacturing, and urban consumption, have continued to remain subdued,' said MPC member Nagesh Kumar in his added, 'It is not clear that the growth momentum will continue in the Q1 of the current year, given the fact that consumption and investment growth is moderating. The survey of corporate performance shows that companies are deleveraging their balance sheets with rising profits. Despite the capacity utilisation crossing beyond 75%, the investment intentions in manufacturing have moderated in 2025-26. The difficult external environment is likely to further complicate the economic growth outlook for 2025-26, especially for the manufacturing sector outlook, with implications for job creation. It calls for supporting growth through both fiscal and monetary policy.'Despite the concerns around external volatility, the RBI's rate-setting panel in its June MPC meeting retained its GDP growth forecast for FY26 at 6.5%, with quarterly estimates holding economy grew at 7.4% in the March quarter, marking the fastest pace in the past four quarters. However, the full-year FY25 growth settled at 6.5%, slightly below the average of recent years. Governor Malhotra had acknowledged persistent external challenges such as geopolitical conflicts and changing trade policies, but remained confident in the domestic economic momentum, supported by a strong monsoon forecast and continued strength in the services central bank maintained its quarterly growth projections for FY26 at 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4. 'Services sector is expected to maintain its momentum. However, spillovers emanating from protracted geopolitical tensions, and global trade and weather-related uncertainties pose downside risks to growth,' the MPC had added that the Indian economy is progressing well and largely in line with expectations, despite the headwinds from the global the inflation front, the RBI had revised its forecast downward for FY26 to 3.7%, from the earlier projection of 4% made in April. The downward revision came amid a sustained drop in price had highlighted that headline inflation fell to a nearly six-year low in April, driven by easing food prices and deflation in fuel. Core inflation remained stable despite global commodity market RBI's latest quarter-wise inflation projections were 2.9% for Q1, 3.4% in Q2, 3.5% in Q3, and 4.4% in Q4. The central bank had stated that risks to the inflation outlook were 'evenly balanced.'With inflation easing and the economy showing selective strength, the RBI and the MPC have chosen to support momentum while remaining cautious of evolving global dynamics.
Business Recorder
2 hours ago
- Business
- Business Recorder
Indian bond yields end a tad higher on week amid worries over oil surge
MUMBAI: Indian government bond yields ended marginally higher for the week on Friday, as elevated oil prices dampened sentiment, overshadowing dovish commentary from the central bank chief. The yield on the benchmark 10-year bond ended at 6.3087%, compared with the previous close of 6.3095%. The five-year 6.75% 2029 bond ended at xx% after ending at 6.0176% on Thursday. The yields rose 1 and 2 basis points this week. 'The immediate lookout in the market is the ongoing Iran- Israel conflict and its impact on oil prices and the currency,' said Rahul Bhuskute, CIO at Bharti AXA Life Insurance. 'If the conflict escalates further and the oil price shoots up sharply, the central bank may find itself in a spot to protect the rupee and may have limited room to ease more.' The benchmark Brent crude contract has risen 4.2% so far this week, after jumping 11.7% last week amid ongoing conflict between Iran and Israel. The contract was around $77 per barrel, with uncertainty about potential U.S. involvement stoking caution. Indian bond yields marginally higher; focus on oil, debt supply India imports a bulk of its crude oil needs, and higher prices could impact its inflation outlook. Earlier this month, the Reserve Bank of India reduced its inflation forecast for the current fiscal year to 3.7%, while cutting its key lending rate by a steeper-than-expected 50 basis points. It, however, reverted to a 'neutral' stance from 'accommodative', prompting analysts to forecast the end of the monetary easing cycle. However, RBI Governor Sanjay Malhotra said earlier in the week that inflation below the central bank's current projections could open up policy space. Rates Indian overnight index swap (OIS) rates eased slightly this week, after witnessing paying in the previous week. The one-year OIS rate was at 5.52%, while the two-year OIS rate ended at 5.52%. The liquid five-year ended at 5.75%.
Mint
6 hours ago
- Business
- Mint
Indian stock market: Israel-Iran war to India-US trade deal— 5 factors that hold keys to trend reversal on Dalal Street
The Indian stock market has been rangebound for almost a month amid heightened geopolitical tensions, Trump's tariff-related uncertainties and stretched valuations. While the benchmark Nifty 50 is up about 1 per cent for June so far, it has stayed in the range of 24,470 to 25,200, failing to hold and extend gains. The domestic market is torn between contrasting triggers, keeping it range-bound. Key macro tailwinds exist on the domestic front. India's GDP is expected to rise about 6-6.5 per cent in FY26, while inflation could fall below 4 per cent. RBI Governor Sanjay Malhotra, after the June policy meeting, lowered the CPI (consumer price index)-based inflation estimates for FY26 to 3.7 per cent from 4 per cent projected earlier while maintaining the real GDP growth estimates at 6.5 per cent for the year. The World Bank expects the Indian economy to grow at 6.3 per cent in FY26. With over 6 per cent growth, India would be the fastest-growing major economy in the world. Moreover, the World Bank expects the Indian economy to grow slightly faster, at 6.5 per cent in FY27 and 6.7 per cent in FY28. On the other hand, geopolitical tensions, global economic slowdown and uncertainty about US President Donald Trump's tariff policies are the key headwinds for the domestic market. Even though domestic consumption remains the dominating theme for the Indian economy, the domestic market cannot completely remain immune to global developments. Let's take a look at five key factors that hold the keys to trend reversal on Dalal Street: The end of the Israel-Iran war could significantly influence market sentiment globally. The Indian stock market may break out on the upside after the two warring countries agree to resolve their issues through talks. "The Nifty, which has been trading within the 24,500-25,000 range for about a month now, is likely to remain within this range in the near term. The upper side of the range will be broken only on news of de-escalation of the Israel-Iran conflict or an abrupt end to the war," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited. Experts at Kotak Institutional Equities believe that the Iran-Israel conflict has raised concerns about India's hitherto solid macroeconomic position and highlighted the higher geopolitical risks in the new world order. "The emergence and escalation of the Iran-Israel conflict may have negative consequences for the Indian economy and market, especially as the rich valuations of the Indian market, sectors and stocks leave very little scope for any negative developments," said Kotak. Experts point out that the Indian stock market has maintained its uptrend despite geopolitical instability. A relief on this front can propel the market to new highs. 'Geopolitical tensions increasingly appear to be the new normal. It began with the Russia-Ukraine conflict, over two years ago, followed by the Israel-Hamas war. In between, there were flare-ups between India and Pakistan, and now tensions are escalating between Israel and Iran. Yet, despite these global headwinds, the Indian stock market has continued its upward trajectory. In a more stable geopolitical environment, the market may soar to unprecedented highs,' said Jaspreet Singh Arora, Chief Investment Officer at Equentis Wealth Advisory Services. The US-India trade deal will also be a key factor for the domestic market. India hopes that both countries will finalise a trade deal before Trump's 'reciprocal tariffs' kick in on July 9. "Before the end of July, a trade deal between India and the US should be finalised. The negotiations are on. Many major nations are expected to finalise their deals by the end of next month. This would be a major trigger for the markets," said Arora. US Fed meeting: Rate cuts unlikely; can Powell's hawkish tone upset trend reversal buzz in Indian stock market? (This is a developing story. Please check back for fresh updates.) Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
