Saturday, 21 October, 2017

India's central bank cuts key lending rate to 6 percent

Economists expect the Reserve Bank of India to cut the repo rate by 25 basis points Economists expect the Reserve Bank of India to cut the repo rate by 25 basis points
Debra Rodriguez | 03 August, 2017, 01:23

The Reserve Bank of India on Wednesday cut the repo rate by 0.25 basis points to 6% as anticipated, which is the lowest in six-and-a-half years since November 2010.

The industry in general and the Union Ministry of Finance had been critical of RBI for not cutting the repo rate in its last two monetary policies.

Under the earlier base rate regime (for borrowers before April 2016), changes in lending rates happened slowly, making it hard for lenders to transmit RBI's rate cuts. The Committee was formed during a year ago on the lines of Federal Open Market Committee in the US.

Under the MCLR rate-setting method, banks calculate the benchmark lending rate by using the cost incurred on incremental deposits, not average cost of deposits. So it was not surprise that markets looked underwhelmed after RBI's 25 bps rate cut.

Pankaj Bansal, Director, M3M Group: RBI's decision to lower the repo rate is on expected lines. "A number of regulatory and developmental measures like tri-party repo for corporate bonds and enhanced limits for foreign investors using the futures market have also been announced", said Chanda Kochhar, MD and CEO, ICICI Bank.

"These factors along with the normal and well distributed normal rainfalls and the smooth roll out of the GST has opened up the space of monetary policy accommodation", RBI said.

The sharp fall in the prices of food articles led to June CPI slipping to a five-year low of 1.5 per cent, way below RBI's long-term target of 4 per cent and its April-September projection of 2-3.5 per cent.

Now the biggest question is will banks slash home loan interest rate? The panel, in its previous bi-monthly review in June, had retained the repo rate at 6.25 per cent for the fourth straight time citing risk to inflation.

As a result, the RBI said it wanted more confidence that inflation would move "close to 4 percent on a durable basis".

Interestingly, the MPC was again divided when it comes to the rate action.

The stock market, which had largely factored in the cut, declined. This cut in the interest rate will be ranging between quarter percentage point to a more than 6-1/2 year low after inflation slumped. The Indian rupee strengthened past 64-mark to hit over two-year high against the U.S. dollar. More than the token rate cut, what one shouldn't miss is the message in the policy document to the government on private investments and infrastructure problems.

Recommended

Microsoft Announces a Trio of Slick New Xbox One Controller Designs Microsoft Announces a Trio of Slick New Xbox One Controller Designs One of the major critiques of the adapter's first revision was its form factor - protruding three inches from a USB port. The Volcano Shadow Special Edition is the latest in the Shadow Series line that Microsoft introduced previous year .

GM, Fiat Chrysler July sales plunge as U.S. auto slump persists GM, Fiat Chrysler July sales plunge as U.S.  auto slump persists Ford also cut fleet sales by 26 percent, and had to stop sales of its Transit commercial van for a few weeks for a recall. Ford's sales excluding heavy trucks declined 7.4 percent, as passenger-car deliveries dropped 19 percent.

Philippine police says crackdown targeting more drug lords Philippine police says crackdown targeting more drug lords During the raid, the police discovered high-powered firearms, explosive devices, huge sums of money and illegal drugs. The deaths came after President Rodrigo Duterte tagged them as politicians involved in the illegal drug trades .

Germany urges United States to talk to European Union about Russian Federation sanctions Germany urges United States to talk to European Union  about Russian Federation  sanctions Berlin will use this opportunity to influence the White House decision and hopes that there is still time until U.S. President Donald Trump finally determines how he will strengthen sanctions against Russian Federation .

Bitcoin Avoided a Fork with One "Awesome" "Positive Change" Bitcoin Avoided a Fork with One But some digital currency exchange operators- including Coinbase and Bitstamp - have said they won't support Bitcoin Cash . Coinbase's decision against supporting the new version, however, means its customers will not receive this benefit.

Congress parades Gujarat MLAs; claims BJP tried to bribe them However, rumours have it that signs of dissent are loud and strong among the 44 MLAs lodged away in Bengaluru . To stop the election of Ahmed Patel, BJP is now banking upon the NOTA provision.

Varied Analyst Comments On AK Steel Holding Corporation (AKS), Achaogen, Inc. (AKAO) Varied Analyst Comments On AK Steel Holding Corporation (AKS), Achaogen, Inc. (AKAO) Raymond James Financial Services Advisors Inc. raised its position in AK Steel Holding Corporation by 20.9% in the fourth quarter. Following the completion of the purchase, the director now directly owns 21,872 shares in the company, valued at $436,127.68.

At least 6 hurt after van hits crowd in LA At least 6 hurt after van hits crowd in LA A fire department spokesperson says four people have been taken to a hospital and two others were treated at the scene. KTLA-TV reports that a 44-year-old man was rushed by first responders to hospital in a critical condition.

Tragic Baby Deaths in 2 Days in Phoenix Tragic Baby Deaths in 2 Days in Phoenix One day earlier, on Friday, seven-month-old Zane Endress died after being left alone in a auto on the northeast side of Phoenix. Phoenix fire responded to the area of 28th Street and Broadway Road after receiving reports about an injured child.

Danilo Gallinari Injures Hand, to be Ready for Camp Danilo Gallinari Injures Hand, to be Ready for Camp Gallinari's new teammate, Blake Griffin , missed significant time in 2016 when he punched a Clippers' equipment manager. Gallinari plays for Italy's global team and they're now preparing for Eurobasket .

Stardew Valley announces big update that'll let you marry your friends Stardew Valley announces big update that'll let you marry your friends Only the main player can decide when to sleep, start and end festivals, and what interactions they would prefer with NPCs. Following the PC release, the patch will then be rolled out to consoles starting with the Nintendo Switch .

Swimmer Missing Off Smith Point Beach A witness told ABC7: "We called some help, we called the police and said there's still a girl in the water". Monday night. 'Suspending a search is always a hard decision and it's something we don't take lightly'.

Real Madrid's Cristiano Ronaldo appears in court on tax fraud charges Real Madrid's Cristiano Ronaldo appears in court on tax fraud charges Mourinho, now coach of Manchester United, has yet to be summoned for questioning and through his agent has denied any wrongdoing . They have both paid additional fines in exchange for their 21-month jail sentences to be suspended.

Wisconsin governor defends $3 bln deal for Foxconn plant Wisconsin governor defends $3 bln deal for Foxconn plant Foxconn was exploring investments in seven states including Illinois, Indiana, Michigan, Ohio, Pennsylvania and Texas. Walker said he would convene a special session of the Wisconsin Legislature to address the Foxconn incentive package .

US, Overseas Airlines Enhance Foreign Airport Security US, Overseas Airlines Enhance Foreign Airport Security As of today, the ban has been removed in full for all ten airports and nine airlines included in the original travel restriction . And Secretary Kelly says terror organizations will continue to try to beat any new security measures that are put in place.