The Reserve Bank of India lowered its policy interest rate by 25bps to 5.75 percent during its June meeting and changed its monetary policy stance to "accommodative" from "neutral". It was the third straight interest rate cut so far this year, as policymakers voiced concerns about the sharp slowdown in investment activity along with a continuing moderation in private consumption growth. The economy grew by 5.8 percent in the fourth quarter of 2018-19 fiscal year, the slowest pace in more than four years. Also, the RBI lowered its growth forecast to 7 percent for 2019/20 from 7.2 percent previously estimated; and raised its retail inflation outlook for the first half of fiscal 2019-20 to a range of 3 percent to 3.1 percent from a range of 2.9 percent to 3 percent. 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 5.75 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 5.00 in 12 months time. In the long-term, the India Interest Rate is projected to trend around 5.50 percent in 2020, according to our econometric models.

India Interest Rate
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Calendar GMT Actual Previous Consensus TEForecast
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 06:00 AM RBI Interest Rate Decision 6% 6.25% 6.0% 6%
2019-06-06 06:15 AM RBI Interest Rate Decision 5.75% 6% 5.75% 5.75%
2019-08-07 06:15 AM RBI Interest Rate Decision 5.75% 5.75%
2019-10-04 06:15 AM RBI Interest Rate Decision 5.75%
2019-12-05 06:15 AM RBI Interest Rate Decision 5.5%



RBI Cuts Key Rate to 5.75%

The Reserve Bank of India lowered its policy interest rate by 25bps to 5.75 percent during its June meeting and changed its monetary policy stance to "accommodative" from "neutral". It was the third straight interest rate cut so far this year, as policymakers voiced concerns about the sharp slowdown in investment activity along with a continuing moderation in private consumption growth.

Excerpts from the RBI Press Release:

In the bi-monthly monetary policy resolution of April 2019, CPI inflation was projected at 2.4 per cent for Q4:2018-19, 2.9-3.0 per cent for H1:2019-20 and 3.5-3.8 per cent for H2:2019-20, with risks broadly balanced. The headline inflation outcome in Q4 at 2.5 per cent was largely in alignment with the April policy projections.

The baseline inflation trajectory for 2019-20 is shaped by several factors. First, the summer pick-up in vegetable prices has been sharper than expected, though this may be accompanied by a correspondingly larger reversal during autumn and winter. More recent information also suggests a broad-based pick-up in prices in several food items. This has imparted an upward bias to the near-term trajectory of food inflation. Second, a significant weakening of domestic and external demand conditions appear to have led to a sharp broad-based decline of 60 bps in inflation excluding food and fuel in April; this has imparted a downward bias to the inflation trajectory for the rest of the year. Third, crude prices have continued to be volatile. However, its impact on CPI inflation has been muted so far due to incomplete pass-through. Fourth, near-term inflation expectations of households have continued to moderate. Taking into consideration these factors, the impact of recent policy rate cuts and expectations of a normal monsoon in 2019, the path of CPI inflation is revised to 3.0-3.1 per cent for H1:2019-20 and to 3.4-3.7 per cent for H2:2019-20, with risks broadly balanced.

Risks around the baseline inflation trajectory emanate from uncertainties relating to the monsoon, unseasonal spikes in vegetable prices, international fuel prices and their pass-through to domestic prices, geo-political tensions, financial market volatility and the fiscal scenario.

In the April policy, GDP growth for 2019-20 was projected at 7.2 per cent – in the range of 6.8-7.1 per cent for H1 and 7.3-7.4 per cent for H2 – with risks evenly balanced. Data for Q4:2018-19 indicate that domestic investment activity has weakened and overall demand has been weighed down partly by slowing exports. Weak global demand due to escalation in trade wars may further impact India’s exports and investment activity. Further, private consumption, especially in rural areas, has weakened in recent months. However, on the positive side, political stability, high capacity utilisation, the uptick in business expectations in Q2, buoyant stock market conditions and higher financial flows to the commercial sector augur well for investment activity. Taking into consideration the above factors and the impact of recent policy rate cuts, GDP growth for 2019-20 is revised downwards from 7.2 per cent in the April policy to 7.0 per cent – in the range of 6.4-6.7 per cent for H1:2019-20 and 7.2-7.5 per cent for H2 – with risks evenly balanced.

The MPC notes that growth impulses have weakened significantly as reflected in a further widening of the output gap compared to the April 2019 policy. A sharp slowdown in investment activity along with a continuing moderation in private consumption growth is a matter of concern. The headline inflation trajectory remains below the target mandated to the MPC even after taking into account the expected transmission of the past two policy rate cuts. Hence, there is scope for the MPC to accommodate growth concerns by supporting efforts to boost aggregate demand, and in particular, reinvigorate private investment activity, while remaining consistent with its flexible inflation targeting mandate.


RBI | Joana Ferreira | joana.ferreira@tradingeconomics.com
6/6/2019 7:25:29 AM



India Money Last Previous Highest Lowest Unit
Interest Rate 5.75 5.75 14.50 4.25 percent [+]
Cash Reserve Ratio 4.00 4.00 10.50 4.00 percent [+]
Interbank Rate 5.86 5.98 12.97 3.10 percent [+]
Money Supply M1 35735.80 35861.40 37218.10 80.15 INR Billion [+]
Money Supply M2 37042.18 37067.55 37403.94 1127.49 INR Billion [+]
Money Supply M3 156023.63 154781.82 156023.63 123.52 INR Billion [+]
Foreign Exchange Reserves 428800.00 429910.00 429910.00 29048.00 USD Million [+]
Central Bank Balance Sheet 18764.59 18244.98 23419.03 1624.31 INR Billions [+]
Loan Growth 12.00 12.00 18.70 4.10 percent [+]
Reverse Repo Rate 5.50 5.75 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 July of 2019.

Actual Previous Highest Lowest Dates Unit Frequency
5.75 5.75 14.50 4.25 2000 - 2019 percent Daily




Country Last Previous
Argentina 58.72 Jul/19
Turkey 24.00 Jun/19
Mexico 8.25 Jul/19
Russia 7.50 Jun/19
Brazil 6.50 Jun/19
South Africa 6.50 Jul/19
India 5.75 Jul/19
Indonesia 5.75 Jul/19
China 4.35 Jun/19
Saudi Arabia 3.00 Jun/19
United States 2.50 Jun/19
Canada 1.75 Jul/19
Singapore 1.67 Jun/19
South Korea 1.50 Jul/19
Australia 1.00 Jul/19
United Kingdom 0.75 Jun/19
Euro Area 0.00 Jun/19
France 0.00 Jun/19
Germany 0.00 Jun/19
Italy 0.00 Jun/19
Netherlands 0.00 Jun/19
Spain 0.00 Jun/19
Japan -0.10 Jun/19
Switzerland -0.75 Jun/19


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