Key Points
The Reserve Bank of India (RBI) may not have officially lowered policy rates yet or demonstrated any intent to do so in the immediate future, but a steady injection of funds over the past few weeks into a liquidity-parched financial system has helped achieve roughly the same objective as that of a formal start to the rate-easing cycle...
This represents overnight rate at which banks lend and borrow funds from one another in the call money market..
After ruling at least a quarter percentage point above the RBI's repo rate for six consecutive months starting August 2023, the WACR has drifted toward the benchmark policy rate in February and March, central bank data showed...
"On liquidity, my guess is that the RBI raised rates to 6.5% and then did a silent 25-basis-point hike, which was reflected largely not just in overnight rates but also through T-bills and other such instruments," said Hitendra Dave, HSBC India CEO...
The broad factors behind the decline in call rate are an improvement in banking system liquidity due to a pick-up in government spending, consistent variable rate repo operations carried out by the RBI and the central bank's recent actions in the foreign exchange markets, treasury executives said.. While the RBI continues to signal vigilance on inflation amid volatile food prices, analysts said the tolerance of a lower call rate suggested comfort that consumer price pressures would now be broadly contained as against the large fluctuations witnessed last year...
You might be interested in
RBI MPC: Home loan borrowers get no relief with unchanged repo rate
09, Jun, 24RBI Monetary Policy 2024-25: The Reserve Bank of India has decided to keep the repo rate unchanged at 6.5%.
RBI MPC meet: Central bank maintains status quo, keeps repo rate unchanged at 6.5%
08, Feb, 24The Monetary Policy Committee also decided by a 5:1 majority to remain focused on "withdrawal of accommodation."
‘Monetary policy actively disinflationary’: RBI keeps repo rate unchanged at 6.5%
08, Dec, 23RBI Governor Shaktikanta Das said the central bank’s successive policy rate hikes, a reference to increases in interest rates, “seems to be working”
RBI Monetary Policy Committee Meeting from April 3: Check time and what to expect on repo rate
02, Apr, 24RBI Monetary Policy April: The meeting is scheduled to start at 10 am on Wednesday. The RBI will announce the review of the policy on April 5, i.e. Friday.
RBI keeps repo rate unchanged. What does that mean for your loan EMI
08, Feb, 24The Reserve Bank of India (RBI) has kept the repo rates unchanged for the sixth time in a row at 6.5 per cent
India's banking system faces record liquidity deficit
24, Jan, 24The deficit widened to 3.34 trillion rupees ($40.18 billion) as on Jan. 23, nearly tripling from the start of the month, data from the Reserve Bank of India (RBI) showed.
RBI could announce another repo rate hike on April 6 to manage inflation
05, Apr, 23The Reserve Bank of India is expected to announce a rate hike on April 6, following a review of its monetary policy. The central bank has raised the repo rate, the rate at which it lends to banks, by a cumulative 250 basis points since May 2022, and Thursday's announcement could be the second hike of the calendar year.
RBI has food for thought but likely to keep rate pause
03, Dec, 23The MPC, which will detail its next policy statement at the end of its three-day meeting on December 8, is seen keeping the repo rate unchanged at 6.50% while retaining its stance of withdrawal of accommodation, an ET poll of 10 economists showed. After raising the repo rate by 250 basis points (2.5 percentage points) from May 2022 to February 2023, the committee has maintained a pause on the benchmark rate, which is the rate at which the RBI lends to banks.
RBI may tighten cash conditions, but CRR hike unlikely- Traders
09, Aug, 23The Reserve Bank of India may look to tighten domestic rupee liquidity to quell inflationary pressures but will refrain from permanent cash withdrawal, several traders and analysts said ahead of Thursday's monetary policy review. The central bank is expected to hold policy rates steady but could turn more hawkish given that inflation in July is likely to have risen above its comfort band.
Effective rates now largely higher than repo rate
06, Feb, 24An analysis of the weighted average call rate (WACR) shows that the key overnight market rate has been much higher than the repo rate was during the phase of rate hikes and stance of calibrated tightening that the central bank had adopted in 2018.