Latest news with #repoRate
Reuters
5 days ago
- Business
- Reuters
India cenbank seeks market views on aligning call money rate with repo, sources say
MUMBAI, June 16 (Reuters) - The Reserve Bank of India has sought feedback from large market participants on aligning the overnight interbank call money rate more closely with the policy repo rate, five treasury officials aware of the discussions told Reuters on Monday. The move follows a Reuters report last week that said the RBI wants the overnight call rate to broadly align with the policy repo rate and is considering steps to ensure that happens. The policy rate currently stands at 5.50%, while the overnight call rate averages 5.30% and the TREPS rate hovers near 5.20%. The overnight call rate and TREPS rate have averaged below the policy rate since April. A persistent gap between the RBI's operative rate and the policy rate typically signals that banks are accessing cheaper funding than what the central bank is comfortable with. The RBI spoke with large treasury officials on Friday to review liquidity conditions and understand why the overnight call rate — the operative policy target — has been persistently trailing the repo rate, two of the sources said. None of the sources wanted to be named because they are not authorised to speak to the media. The RBI did not immediately reply to a Reuters email seeking comment. The central bank is also keen to understand why treasury bill yields have spiked in the last week, the two sources added. The yield on 364-day notes was sharply higher than estimates last Wednesday. "The motive seemed to be to sensitise the market that a variable rate reverse repo auction would be in the offing," a senior official at a state-run bank said. The source had added that the RBI could start conducting variable rate reverse repo auctions to suck out surplus liquidity as and when required. The weighted average overnight call rate has remained well below the RBI's key repo rate and closer to the policy corridor's floor, the Standing Deposit Facility rate, for the past few weeks. On June 6, the RBI slashed its key policy rate by 50 basis points, but changed its stance to neutral, indicating limited room for further cuts. The RBI also announced a reduction in banks' cash reserve ratio by 100 basis points September onwards. The central bank also stopped conducting daily fund infusion through variable rate repo since June 11, which market took as an indication that the RBI may move towards VRRR soon. Market participants have requested that the RBI avoid shocks in liquidity management which would help avoid volatility in short-term rates, another treasury official said. "Given that the focus of monetary policy is on enhancing transmission, the expectation channel is equally important. Hence, it would be better to move overnight rates towards repo rate after some time, allowing transmission to gain pace," said Gaura Sen Gupta, chief economist with IDFC First Bank.
Yahoo
5 days ago
- Business
- Yahoo
India cenbank seeks market views on aligning call money rate with repo, sources say
By Siddhi Nayak and Dharamraj Dhutia MUMBAI (Reuters) -The Reserve Bank of India has sought feedback from large market participants on aligning the overnight interbank call money rate more closely with the policy repo rate, five treasury officials aware of the discussions told Reuters on Monday. The move follows a Reuters report last week that said the RBI wants the overnight call rate to broadly align with the policy repo rate and is considering steps to ensure that happens. The policy rate currently stands at 5.50%, while the overnight call rate averages 5.30% and the TREPS rate hovers near 5.20%. The overnight call rate and TREPS rate have averaged below the policy rate since April. A persistent gap between the RBI's operative rate and the policy rate typically signals that banks are accessing cheaper funding than what the central bank is comfortable with. The RBI spoke with large treasury officials on Friday to review liquidity conditions and understand why the overnight call rate — the operative policy target — has been persistently trailing the repo rate, two of the sources said. None of the sources wanted to be named because they are not authorised to speak to the media. The RBI did not immediately reply to a Reuters email seeking comment. The central bank is also keen to understand why treasury bill yields have spiked in the last week, the two sources added. The yield on 364-day notes was sharply higher than estimates last Wednesday. "The motive seemed to be to sensitise the market that a variable rate reverse repo auction would be in the offing," a senior official at a state-run bank said. The source had added that the RBI could start conducting variable rate reverse repo auctions to suck out surplus liquidity as and when required. The weighted average overnight call rate has remained well below the RBI's key repo rate and closer to the policy corridor's floor, the Standing Deposit Facility rate, for the past few weeks. On June 6, the RBI slashed its key policy rate by 50 basis points, but changed its stance to neutral, indicating limited room for further cuts. The RBI also announced a reduction in banks' cash reserve ratio by 100 basis points September onwards. The central bank also stopped conducting daily fund infusion through variable rate repo since June 11, which market took as an indication that the RBI may move towards VRRR soon. Market participants have requested that the RBI avoid shocks in liquidity management which would help avoid volatility in short-term rates, another treasury official said. "Given that the focus of monetary policy is on enhancing transmission, the expectation channel is equally important. Hence, it would be better to move overnight rates towards repo rate after some time, allowing transmission to gain pace," said Gaura Sen Gupta, chief economist with IDFC First Bank.
Bloomberg
10-06-2025
- Business
- Bloomberg
Turkey Bank Shares Near Three-Month High on Rate Cut Expectation
Turkish bank shares rallied on Tuesday after the central bank provided more funding through its cheaper one-week repo rate, a move seen by markets as a sign that interest-rate cuts could be on the horizon. The Borsa Istanbul Banks Index rose as much as 4.9% to the highest in nearly three months after the central bank said 100 billion liras ($2.5 billion) were lent at its repo auction on Tuesday — almost ten times the past month's 11 billion liras daily average — at the 46% one-week rate. That's lower than the overnight rate it's been using for such operations and would lower the weighted average funding cost for the market.
Times of Oman
07-06-2025
- Business
- Times of Oman
Industry leaders hail RBI's rate cut as catalyst for further boosting housing demand and homebuyer sentiment
New Delhi: The Reserve Bank of India's Monetary Policy Committee (MPC) has taken a decisive step to revive economic momentum by slashing the repo rate by 50 basis points, bringing it down to 5.5%, while also reducing the Cash Reserve Ratio (CRR) by 100 bps. These moves, combined with a revised CPI inflation outlook of 3.7% and a projected real GDP growth of 6.5% for FY26, reflect a front-loaded approach to accelerate growth and consumer confidence. Responding to the announcement, CREDAI-MCHI, the apex body of real estate developers in the Mumbai Metropolitan Region, Gera Developments and Star Housing Finance Limited welcomed the RBI's bold and growth-oriented stance, highlighting its strong potential to unlock housing demand, especially in the affordable and mid-income segments. Mr. Domnic Romell, President, CREDAI-MCHI said: "This dual action of reducing both the repo rate and CRR sends a clear signal--liquidity infusion and affordability are a priority. Lower interest rates on home loans will make homeownership more accessible to thousands of first-time buyers across MMR and beyond. This move can energize end-user sentiment, improve project viability, and bring housing within reach for many." Mr. Dhaval Ajmera, Secretary, CREDAI-MCHI added: "We urge banks and lending institutions to swiftly transmit the benefit of the rate cut to consumers. The current economic environment--low inflation, improved liquidity, and steady demand--creates a strong foundation for a real estate-led recovery. This is the ideal time for aspiring homebuyers to take the leap." CREDAI-MCHI also emphasized that the CRR cut will support NBFCs and banks in extending more credit to developers, particularly those operating in emerging growth corridors of MMR such as Panvel, Dombivli, Vasai-Virar, and Kalyan, where affordable housing remains the driving force. The organization reaffirmed its commitment to working collaboratively with stakeholders to ensure the benefits of this monetary easing are passed on efficiently and transparently, accelerating India's journey toward inclusive housing and sustainable urban growth. Mr. Rohit Gera, Managing Director Gera Developments, highlighted: "The RBI's decision today to cut the repo rate for the third time in a row comes as no surprise, given the strong macro indicators retail inflation easing to 3% levels, solid GDP momentum with a 6.5% growth target, and ample durable liquidity already pumped into the system. This cumulative 100 bps repo rate reduction in 2025 is now complemented by a sharp 100 bps cut in the CRR from 4% to 3% which alone injects significant liquidity and lowers banks' cost of funds. Together, these measures are designed to accelerate monetary policy transmission and bring down lending rates across the board. This reflects the central bank's aim to bolster domestic economic growth and shared prosperity amid global uncertainties. For the real estate sector, this move could be a catalyst: lower borrowing costs will translate into reduced EMIs and improved homebuyer sentiment. Hopefully, banks actively and rapidly pass on the cut to home buyers. The policy stance clearly aims to revive private investment and consumption." Mr. Kalpesh Dave, Director & CEO, Star Housing Finance Limited mentioned: "The RBI's decision to reduce the repo rate by 50 basis points is a welcome move. This should translate into lower EMIs for home loan borrowers. Disposable income should increase and thereby scope for increased spending. Concurrently, it lowers the borrowing costs for HFCs and NBFCs. We anticipate a thrust in retail credit off-take, particularly in home financing, as affordability improves. This is a positive step that should stimulate consumer spending and boost the housing sector. While celebrating this growth impetus, we acknowledge that vigilant inflation monitoring remains crucial going forward to sustain these benefits."
CNA
06-06-2025
- Business
- CNA
Reserve Bank of India lowers key interest rate by 50 basis points to 5.5% in surprise move
India's central bank has taken investors by surprise with a larger-than-expected slash to interest rates, while making it easier for banks to lend money. The Reserve Bank of India lowered its key repo rate by 50 basis points to 5.5 per cent. Most analysts had expected a 25-point cut. It is the third reduction in a row since February. Shubhada Rao, founder of QuantEco Research, speaks to CNA from Mumbai on the rationale behind the move.
