The Reserve Bank of India left its key policy rate steady at 6.5 percent for the second straight meeting on December 5th 2018, in line with market expectations. Policymakers reiterated the decision is consistent with a calibrated tightening that aims to achieve a 4 percent +/- 2 percent inflation target and support growth. The reverse repo rate was also left at 6.25 percent and the marginal standing facility rate and the Bank Rate at 6.75 percent each. Interest Rate in India averaged 6.66 percent from 2000 until 2018, 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 6.50 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 7.25 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.

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Calendar GMT Actual Previous Consensus TEForecast
2018-06-06 09:00 AM RBI Interest Rate Decision 6.25% 6% 6% 6%
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 09:00 AM RBI Interest Rate Decision 6.5% 7%



India Leaves Rates Steady as Expected

The Reserve Bank of India left its key policy rate steady at 6.5 percent for the second straight meeting on December 5th 2018, in line with market expectations. Policymakers reiterated the decision is consistent with a calibrated tightening that aims to achieve a 4 percent +/- 2 percent inflation target and support growth. The reverse repo rate was also left at 6.25 percent and the marginal standing facility rate and the Bank Rate at 6.75 percent each.

Excerpts from the RBI Press Release:

There have been several important developments since the October policy which will have a bearing on the inflation outlook. First, despite a significant scaling down of inflation projections in the October policy primarily due to moderation in food inflation, subsequent readings have continued to surprise on the downside with the food group slipping into deflation. Secondly, in contrast to the food group, there has been a broad-based increase in inflation in non-food groups. Thirdly, international crude oil prices have declined sharply since the last policy; the price of Indian crude basket collapsed to below US$ 60 a barrel by end-November after touching US$ 85 a barrel in early October. Fourthly, global financial markets have continued to be volatile with EME currencies showing a somewhat appreciating bias in the last one month. Finally, the effect of the 7th Central Pay Commission’s HRA increase has continued to wane along expected lines. Taking all these factors into consideration and assuming a normal monsoon in 2019, inflation is projected at 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.

Turning to growth projections, although Q2 growth was lower than that projected in the October policy, GDP growth in H1 has been broadly along the line in the April policy when for the year as a whole GDP growth was projected at 7.4 per cent. Going forward, lower rabi sowing may adversely affect agriculture and hence rural demand. Financial market volatility, slowing global demand and rising trade tensions pose negative risk to exports. However, on the positive side, the decline in crude oil prices is expected to boost India’s growth prospects by improving corporate earnings and raising private consumption through higher disposable incomes. Increased capacity utilisation in the manufacturing sector also portends well for new capacity additions. There has been significant acceleration in investment activity and high frequency indicators suggest that it is likely to be sustained. Credit offtake from the banking sector has continued to strengthen even as global financial conditions have tightened. FDI flows could also increase with the improving prospects of the external sector. The demand outlook as reported by firms polled in the Reserve Bank’s IOS has improved in Q4. Based on an overall assessment, GDP growth for 2018-19 has been projected at 7.4 per cent (7.2-7.3 per cent in H2) as in the October policy, and for H1:2019-20 at 7.5 per cent, with risks somewhat to the downside.


RBI | Joana Taborda | joana.taborda@tradingeconomics.com
12/5/2018 9:42:03 AM


News

India Leaves Rates Unchanged
The Reserve Bank of India unexpectedly left its key policy rate steady at 6.5 percent on October 5th 2018, following a 25bps hike in the previous meeting, surprising markets that expected a similar rise to support a falling currency and curb inflationary pressures from oil prices. Policymakers said the decision is consistent with a calibrated tightening that aims to achieve a 4 percent +/- 2 percent inflation target and support growth. The reverse repo rate was also left at 6.25 percent and the marginal standing facility rate and the Bank Rate at 6.75 percent each.
Published on 2018-10-05

India Raises Key Rate to 6.5%
The Reserve Bank of India increased its benchmark policy repo rate by 25bps to 6.5 percent on August 1st 2018, in line with market expectations and following a similar hike in the previous meeting. Policymakers mentioned uncertainty around inflation and slightly increased forecasts for H2 2018-19 to 4.8 percent from 4.7 percent. Although the central bank considers growth momentum is sustained, it noticed several global risks that could weigh on the outlook, including rising trade protectionism, geopolitical tensions and higher oil prices.
Published on 2018-08-01

India Hikes Key Repo Rate to 6.25%
The Reserve Bank of India raised its benchmark policy repo rate by 25bps to 6.25 percent on June 6th 2018 while markets expected no changes. It is the first hike in borrowing costs since January of 2014, mentioning upside risks to inflation that include higher oil prices and uncertainty in global financial markets. Policymakers said the decision is consistent with a neutral monetary policy stance and is in line with achieving the inflation target of 4 percent +/- 2 percent while supporting growth. The reverse repo rate was also adjusted to 6 percent from 5.75 percent and the marginal standing facility rate and the Bank Rate to 6.5 percent from 6.25 percent.
Published on 2018-06-06

India Leaves Monetary Policy Unchanged
The Reserve Bank of India left its key policy rate steady at 6 percent for the fourth meeting on April 5th 2018, matching market expectations. Policymakers said once again the decision is consistent with the neutral stance of monetary policy aiming to achieve the medium-term inflation target of 4 percent +/- 2 percent, while supporting growth. The central bank lowered inflation forecasts to 4.5 percent for Q4 of the current fiscal year (January to March 2018) from 5.1 percent. GDP growth for 2018-19 is seen higher at 7.4 percent from 6.6 percent in 2017-2018.
Published on 2018-04-05



India Money Last Previous Highest Lowest Unit
Interest Rate 6.50 6.50 14.50 4.25 percent [+]
Cash Reserve Ratio 4.00 4.00 10.50 4.00 percent [+]
Money Supply M1 32885.10 32506.30 32917.10 80.15 INR Billion [+]
Interbank Rate 6.65 6.65 12.97 3.10 percent [+]
Money Supply M2 34041.59 34142.16 34142.16 1127.49 INR Billion [+]
Money Supply M3 145985.59 145447.49 145985.59 123.52 INR Billion [+]
Foreign Exchange Reserves 396080.00 393400.00 426080.00 29048.00 USD Million [+]
Central Bank Balance Sheet 17610.34 16855.94 23419.03 1624.31 INR Billions [+]
Loan Growth 15.10 15.10 18.70 4.10 percent [+]
Reverse Repo Rate 6.25 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 January of 2019.

Actual Previous Highest Lowest Dates Unit Frequency
6.50 6.50 14.50 4.25 2000 - 2018 percent Daily




Country Last Previous
Argentina 57.80 Jan/19
Turkey 24.00 Dec/18
Mexico 8.25 Dec/18
Russia 7.75 Dec/18
South Africa 6.75 Dec/18
Brazil 6.50 Dec/18
India 6.50 Dec/18
Indonesia 6.00 Dec/18
China 4.35 Dec/18
Saudi Arabia 3.00 Dec/18
United States 2.50 Dec/18
Singapore 1.76 Dec/18
Canada 1.75 Jan/19
South Korea 1.75 Dec/18
Australia 1.50 Dec/18
United Kingdom 0.75 Dec/18
Euro Area 0.00 Dec/18
France 0.00 Dec/18
Germany 0.00 Dec/18
Italy 0.00 Dec/18
Netherlands 0.00 Dec/18
Spain 0.00 Dec/18
Japan -0.10 Dec/18
Switzerland -0.75 Dec/18


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