The Reserve Bank of India lowered unexpectedly its benchmark interest rate by 25bps to 6.25 percent on February 7th and shifted its stance to "neutral", in an attempt to boost a slowing economy as inflation rate remains well below its mid-point 4 percent target. Interest Rate in India averaged 6.65 percent from 2000 until 2019, reaching an all time high of 14.50 percent in August of 2000 and a record low of 4.25 percent in April of 2009.

Interest Rate in India is expected to be 6.25 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in India to stand at 6.25 in 12 months time. In the long-term, the India Interest Rate is projected to trend around 6.75 percent in 2020, according to our econometric models.

India Interest Rate
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Calendar GMT Actual Previous Consensus TEForecast
2018-08-01 09:00 AM RBI Interest Rate Decision 6.5% 6.25% 6.5% 6.5%
2018-10-05 09:00 AM RBI Interest Rate Decision 6.5% 6.5% 6.75% 6.75%
2018-12-05 09:00 AM RBI Interest Rate Decision 6.5% 6.5% 6.5% 6.5%
2019-02-07 07:00 AM RBI Interest Rate Decision 6.25% 6.5% 6.5% 6.5%
2019-04-04 08:00 AM RBI Interest Rate Decision 6.25% 6.25%

RBI Unexpectedly Cuts Key Policy Rate to 6.25%

The Reserve Bank of India lowered unexpectedly its benchmark interest rate by 25bps to 6.25 percent on February 7th and shifted its stance to "neutral" in an attempt to boost a slowing economy as inflation rate remains well below its mid-point target of 4 percent.

Excerpts from the RBI Press Release:

In the fifth bi-monthly monetary policy resolution in December 2018, CPI inflation for 2018-19 was projected in the range of 2.7-3.2 per cent in H2:2018-19 and 3.8-4.2 per cent in H1:2019-20, with risks tilted to the upside. The actual inflation outcome at 2.6 per cent in Q3:2018-19 was marginally lower than the projection. There have been downward revisions in inflation projections during the course of the year, reflecting mainly the unprecedented soft inflation recorded across food sub-groups.

Turning to the growth outlook, GDP growth for 2018-19 in the December policy was projected at 7.4 per cent (7.2-7.3 per cent in H2) and at 7.5 per cent for H1:2019-20, with risks somewhat to the downside. The CSO has estimated GDP growth at 7.2 per cent for 2018-19. Looking beyond the current year, the growth outlook is likely to be influenced by the following factors. First, aggregate bank credit and overall financial flows to the commercial sector continue to be strong, but are yet to be broad-based. Secondly, in spite of soft crude oil prices and the lagged impact of the recent depreciation of the Indian rupee on net exports, slowing global demand could pose headwinds. In particular, trade tensions and associated uncertainties appear to be moderating global growth. Taking into consideration the above factors, GDP growth for 2019-20 is projected at 7.4 per cent – in the range of 7.2-7.4 per cent in H1, and 7.5 per cent in Q3 – with risks evenly balanced.

Headline inflation is projected to remain soft in the near term reflecting the current low level of inflation and the benign food inflation outlook. Beyond the near term, some uncertainties warrant careful monitoring. First, vegetable prices have been volatile in the recent period; reversal in vegetable prices could impart upside risk to the food inflation trajectory. Secondly, the oil price outlook continues to be hazy. Thirdly, a further heightening of trade tensions and geo-political uncertainties could also weigh on global growth prospects, dampening global demand and softening global commodity prices, especially oil prices. Fourthly, the unusual spike in the prices of health and education needs to be closely watched. Fifthly, financial markets remain volatile. Sixthly, the monsoon outcome is assumed to be normal; any spatial or temporal variation in rainfall may alter the food inflation outlook. Finally, several proposals in the union budget for 2019-20 are likely to boost aggregate demand by raising disposable incomes, but the full effect of some of the measures is likely to materialise over a period of time.

The MPC notes that the output gap has opened up modestly as actual output has inched lower than potential. Investment activity is recovering but supported mainly by public spending on infrastructure. The need is to strengthen private investment activity and buttress private consumption.

RBI | Joana Ferreira |
2/7/2019 8:22:00 AM

India Money Last Previous Highest Lowest Unit
Interest Rate 6.25 6.50 14.50 4.25 percent [+]
Cash Reserve Ratio 4.00 4.00 10.50 4.00 percent [+]
Money Supply M1 33425.70 32785.80 33425.70 80.15 INR Billion [+]
Interbank Rate 6.36 6.40 12.97 3.10 percent [+]
Money Supply M2 34936.98 34510.22 34936.98 1127.49 INR Billion [+]
Money Supply M3 150535.59 148946.83 150535.59 123.52 INR Billion [+]
Foreign Exchange Reserves 405640.00 402040.00 426080.00 29048.00 USD Million [+]
Central Bank Balance Sheet 18123.49 17616.33 23419.03 1624.31 INR Billions [+]
Loan Growth 14.60 14.40 18.70 4.10 percent [+]
Reverse Repo Rate 6.00 6.25 13.50 3.25 percent [+]

India Interest Rate

In India, interest rate decisions are taken by the Reserve Bank of India's Central Board of Directors. The official interest rate is the benchmark repurchase rate. In 2014, the primary objective of the RBI monetary policy became price stability, giving less importance to government's borrowing, the stability of the rupee exchange rate and the need to protect exports. In February 2015, the government and the central bank agreed to set a consumer inflation target of 4 percent, with a band of plus or minus 2 percentage points, from the financial year ending in March 2017. This page provides - India Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. India Interest Rate - actual data, historical chart and calendar of releases - was last updated on March of 2019.

Actual Previous Highest Lowest Dates Unit Frequency
6.25 6.50 14.50 4.25 2000 - 2019 percent Daily

Country Last Previous
Argentina 65.76 Mar/19
Turkey 24.00 Mar/19
Mexico 8.25 Feb/19
Russia 7.75 Mar/19
South Africa 6.75 Feb/19
Brazil 6.50 Mar/19
India 6.25 Feb/19
Indonesia 6.00 Mar/19
China 4.35 Feb/19
Saudi Arabia 3.00 Feb/19
United States 2.50 Mar/19
Canada 1.75 Mar/19
South Korea 1.75 Feb/19
Singapore 1.66 Feb/19
Australia 1.50 Mar/19
United Kingdom 0.75 Mar/19
Euro Area 0.00 Mar/19
France 0.00 Mar/19
Germany 0.00 Mar/19
Italy 0.00 Mar/19
Netherlands 0.00 Mar/19
Spain 0.00 Mar/19
Japan -0.10 Mar/19
Switzerland -0.75 Mar/19