Urjit Patel says still more scope for banks to cut lending rates

Economists predict the Reserve Bank of India will leave the repurchase rate unchanged at 6.25% on Thursday
Urjit Patel says still more scope for banks to cut lending rates
Author

10 April, 2017

"Consequent upon the narrowing of the LAF corridor, the reverse repo rate under the LAF is at 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate are at 6.50 per cent", an RBI policy statement said. "The RBI definitely does not expect CPI (consumer price index) inflation to go below 4% next year and the range of 4.5-5% will be the base on which the monsoon progress impact will hinge on", he added.

The repo rate was last reduced by a quarter-point in October at the first meeting chaired by Governor Patel, before the announcement of demonetization on November 8 a year ago. The move will encourage banks to park their funds with RBI, say analysts. Borrowers lost one of their last hopes for lower rates, as the central bank cited upside risks to inflation in FY18, which economists read as RBI hitting pause button.

"Underlying inflation pressures persist, especially in prices of services", the RBI said in its statement Thursday, reiterating its neutral stance.

Governor Urjit Patel attends a news conference after the bi-monthly monetary policy review in Mumbai, India April 6, 2017.

The lack of transmission has been one of the dominant worries expressed by RBI during the past two years when it was in an accommodative stance.

"We are maintaining status quo on repo rate in April policy", said a state-run State Bank of India report authored by Chief Economic Adviser Soumya Kanti Ghosh.

"Several indicators are pointing to a modest improvement in the macroeconomic outlook".

North Korea fires missile into Sea of Japan
An Air Force general says she is extremely confident the United States could intercept a ballistic missile fired by North Korea. Two weeks ago, the South Korean and US militaries said they had detected a failed North Korean ballistic missile launch.


Jupiter makes closest approach to Earth
Connect with NJTODAY.NET Join NJTODAY.NET's free Email List to receive occasional updates delivered right to your email address! Data gathered by Hubble compliments other NASA missions that are also looking at the Jovian system.


ICE access to jail for immigration review denied by sheriff's office
And at least two Denver-area undocumented women have sought refuge at Denver churches to avoid deportation . The five arrested in Wyoming were all taken into custody in Jackson.


Retail inflation for 2017-18 is projected at 4.5 per cent in the first half and 5 per cent in the second half.

With inflationary concerns in mind, the Reserve Bank of India (RBI) on Thursday retained its key lending rate unchanged at 6.25 per cent, and criticised loan waiver promises as a "moral hazard" that entails transfer of taxpayers' money.

The government, mindful of the impact on inflation, has already indicated it is considering acting with the RBI in implementing a special facility to drain the extra liquidity.

"RBI left rates unchanged as the markets had expected".

Noting that excluding food and fuel, inflation has been unyielding at 4.9 percent since September, the RBI said: "The Committee is of the view that the persistence of inflation excluding food and fuel could set a floor on further downward movements in headline inflation and trigger second-order effects". Issuances of cash management bills (CMBs) under the market stabilisation scheme (MSS) ceased in mid-January and existing issues matured with the consequent release of liquidity being absorbed primarily through variable rate reverse repo auctions of varying tenors.

Moreover, Gross Value Added growth is projected to be 7.4% in 2017-'18, up from 6.7% the previous financial year, the RBI announced.

But the RBI has long anxious about sudden reversals of foreign flows, after first-hand experience in 2013 when worries about Fed tightening plunged India into its worst currency crisis in more than two decades. "I think, were largely sorted out", said Joseph Zvegllich, director at the Asian Development Bank's macroeconomics research division.


More news


  • North Korea calls US strikes on Syria 'unforgivable'

    North Korea calls US strikes on Syria 'unforgivable'

    Pyongyang has repeatedly defied worldwide warnings about conducting missile launches and testing nuclear devices. It claims its nuclear weapons are a necessary deterrent to the USA military threat.
    Ford designs baby crib that mimics soothing auto  ride

    Ford designs baby crib that mimics soothing auto ride

    It also has built-in microphones so you can monitor your child from the next room and it can gently rock the little one to sleep. Ford's latest innovation uses your smartphone to capture your car's movements and sounds and then reproduces them in the crib.
    Samsung Launches Galaxy C7 Pro For Rs 27990

    Samsung Launches Galaxy C7 Pro For Rs 27990

    In terms of optics, the smartphone features a 16-megapixel sensor on both the front and back with f/1.9 aperture. Internally, it is powered by a 1.5 GHz quad-core Spreadtrum processor along with which we also get 2GB of RAM.
  • Governor Brown lifts drought emergency, retains prohibition on wasteful practices

    Urban Californians responded to the drought with a almost 25 percent average reduction in water use across the state. It also dried up wells, forcing hundreds of families in rural areas to drink bottled water and bathe from buckets.
    Pakistan captain Misbah-ul-Haq to retire after West Indies series

    Pakistan captain Misbah-ul-Haq to retire after West Indies series

    Speculation regarding Misbah's retirement had been sparked by Pakistan's disastrous tours of Australia and New Zealand. Under Misbah-ul-Haq's leadership, Pakistan climbed to No.1 in the Test rankings for a couple of months.
    Epic Cassini Saturn Mission Begins 'Grand Finale' This Month

    Epic Cassini Saturn Mission Begins 'Grand Finale' This Month

    Beyond that, Cassini will spend its remaining time studying Saturn itself, including its atmosphere and magnetic fields. Cassini was launched in 1997 and has discovered several remarkable revelations about Saturn.
  • South Korea condemns North Korea missile launch

    South Korea condemns North Korea missile launch

    The North has defied the ban, saying it infringes on its sovereign rights to self-defense and the pursuit of space exploration. He told reporters at his Tokyo residence he was watching to see how China would respond to Pyongyang after Xi meets Trump.

    O'Reilly book offers tips on how to treat women

    O'Reilly should not have settled and said , "I don't think Bill would do anything wrong". But similar efforts to force Rush Limbaugh off the radio haven't worked.

    Israel 'studying' Russian statement on Jerusalem recognition

    Elichai Taherlev, 20, of the Golani Brigade was killed in the incident, and another 19-year-old soldier was slightly injured. Long-standing US policy has called for the status of Jerusalem to be resolved by the Israeli-Palestinian peace process.
  • Celtic seals 6th Scottish title in row with 8 games to spare

    Only four points have been dropped, with draws away to Inverness in September and at home to Rangers in March. Celtic's unbeaten run across three domestic competitions stands at 36 games.
    Spotify could go public in an unusual way

    Spotify could go public in an unusual way

    With varying degrees of enthusiasm, the rest of the industry will probably follow - even if some labels hold out for a while.
    Secret Service agent caught after meeting prostitute

    Secret Service agent caught after meeting prostitute

    The incident also prompted the agency to tighten its rules for employees traveling to foreign countries. A secret service agent has been suspended from his job after reportedly meeting a prostitute.