The Reserve Bank of India lowered its benchmark repo rate by 35 bps to 5.40 percent during its August meeting, while markets had forecast a smaller 25bps cut. This was the fourth straight rate cut so far this year, in an attempt to boost economic growth while the inflation outlook remains benign. Also, the RBI lowered its growth forecast to 6.9 percent for 2019/20 from 7.0 percent previously estimated; and inflation was projected at 3.4-3.7 percent for the second half of fiscal 2019-20. Interest Rate in India averaged 6.64 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 5.40 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 4.50 percent in 2020, according to our econometric models.

India Interest Rate
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Calendar GMT Actual Previous Consensus TEForecast
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 5.40% 5.75% 5.5% 5.5%
2019-10-04 06:15 AM RBI Interest Rate Decision 5.40% 5.40%
2019-12-05 06:15 AM RBI Interest Rate Decision 5.20%
2020-02-06 06:15 AM RBI Interest Rate Decision 5.20%



RBI Cuts Interest Rates by 35bps

The Reserve Bank of India lowered its benchmark repo rate by 35 bps to 5.40 percent during its August meeting, while markets had forecast a smaller 25bps cut. This was the fourth straight rate cut so far this year, in an attempt to boost economic growth while the inflation outlook remains benign.

Excerpts from the RBI policy statement:

In the second bi-monthly monetary policy resolution of June 2019, CPI inflation was projected at 3.0-3.1 per cent for H1:2019-20 and 3.4-3.7 per cent for H2:2019-20, with risks broadly balanced. The actual headline inflation outcome for Q1:2019-20 at 3.1 per cent was in alignment with these projections. 18.
 
The baseline inflation trajectory for the next four quarters will be shaped by several factors. First, the uptick in food inflation may be sustained by price pressures in vegetables and pulses as more recent data suggest. Uneven spatial and temporal distribution of monsoon could exert some upward pressure on food items, though this risk is likely to be mitigated by the recent catch up in rainfall. Second, despite excess supply conditions, crude oil prices may likely remain volatile due to geo-political tensions in the Middle-East. Third, the outlook for CPI inflation excluding food and fuel remains soft. Manufacturing firms participating in the industrial outlook survey expect output prices to ease in Q2. Fourth, one year ahead inflation expectations of households polled by the Reserve Bank have moderated. Taking into consideration these factors and the impact of recent policy rate cuts, the path of CPI inflation is projected at 3.1 per cent for Q2:2019-20 and 3.5-3.7 per cent for H2:2019-20, with risks evenly balanced. CPI inflation for Q1:2020-21 is projected at 3.6 per cent.  
 
In the MPC’s June resolution, real GDP growth for 2019-20 was projected at 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. Various high frequency indicators suggest weakening of both domestic and external demand conditions. The Business Expectations Index of the Reserve Bank’s industrial outlook survey shows muted expansion in demand conditions in Q2, although a decline in input costs augurs well for growth. The impact of monetary policy easing since February 2019 is also expected to support economic activity, going forward. Moreover, base effects will turn favourable in H2:2019-20. Taking into consideration the above factors, real GDP growth for 2019-20 is revised downwards from 7.0 per cent in the June policy to 6.9 per cent – in the range of 5.8-6.6 per cent for H1:2019-20 and 7.3- 5 7.5 per cent for H2 – with risks somewhat tilted to the downside; GDP growth for Q1:2020-21 is projected at 7.4 per cent.
 
The MPC notes that inflation is currently projected to remain within the target over a 12-month ahead horizon. Since the last policy, domestic economic activity continues to be weak, with the global slowdown and escalating trade tensions posing downside risks. Private consumption, the mainstay of aggregate demand, and investment activity remain sluggish. Even as past rate cuts are being gradually transmitted to the real economy, the benign inflation outlook provides headroom for policy action to close the negative output gap. Addressing growth concerns by boosting aggregate demand, especially private investment, assumes the highest priority at this juncture while remaining consistent with the inflation mandate.


Reserve Bank of India | Chusnul Ch Manan | chusnul@tradingeconomics.com
8/7/2019 9:47:28 AM



India Money Last Previous Highest Lowest Unit
Interest Rate 5.40 5.75 14.50 4.25 percent [+]
Cash Reserve Ratio 4.00 4.00 10.50 4.00 percent [+]
Money Supply M1 35745.70 35496.50 37218.10 80.15 INR Billion [+]
Interbank Rate 5.32 5.37 12.97 3.10 percent [+]
Money Supply M2 36941.69 37153.85 37403.94 1127.49 INR Billion [+]
Money Supply M3 156414.63 156023.63 156414.63 123.52 INR Billion [+]
Foreign Exchange Reserves 429610.00 428600.00 430570.00 29048.00 USD Million [+]
Central Bank Balance Sheet 19425.91 18937.06 23419.03 1624.31 INR Billions [+]
Loan Growth 10.20 11.60 18.70 4.10 percent [+]
Reverse Repo Rate 5.15 5.50 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 September of 2019.

Actual Previous Highest Lowest Dates Unit Frequency
5.40 5.75 14.50 4.25 2000 - 2019 percent Daily




Country Last Previous
Argentina 83.21 Sep/19
Turkey 16.50 Sep/19
Mexico 8.00 Aug/19
Russia 7.00 Sep/19
South Africa 6.50 Sep/19
Brazil 5.50 Sep/19
India 5.40 Aug/19
Indonesia 5.25 Sep/19
China 4.20 Sep/19
Saudi Arabia 2.50 Sep/19
United States 2.00 Sep/19
Canada 1.75 Sep/19
Singapore 1.74 Aug/19
South Korea 1.50 Aug/19
Australia 1.00 Sep/19
United Kingdom 0.75 Sep/19
Euro Area 0.00 Sep/19
France 0.00 Sep/19
Germany 0.00 Sep/19
Italy 0.00 Sep/19
Netherlands 0.00 Sep/19
Spain 0.00 Sep/19
Japan -0.10 Sep/19
Switzerland -0.75 Sep/19


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