The RBI monetary policy committee's (MPC) decision to go for a relatively mammoth cut, while changing the stance to neutral, should not be confused with a pause on future rate cuts trajectory in the medium term, but rather a semblance of adopting flexible manoeuvrability on part of a conscious regulator to diligently perform a new troika, a State Bank of India (SBI) Research report said on Tuesday.
The RBI’s Monetary Policy signals an environment conducive to stronger consumption-led growth, supported by easier credit and regulatory easing, while highlighting cautious optimism amid stretched market valuations.
The decision followed the easing of certain SEZ (special economic zone) rules to promote the manufacturing of semiconductors and electronics components.
Finance Minister Nirmala Sitharaman, while inaugurating the Security Printing and Minting Corporation of India Limited's (SPMCIL) new corporate office here, has said that the corporation's role is pivotal in strengthening India's economic and security printing framework, and its commitment to innovation, self-reliance, and sustainability is commendable.
Reserve Bank of India will stop daily Variable Rate Repo auctions. The discontinuation is effective from June 11, 2025. This decision follows a review of liquidity conditions. Earlier, daily VRR auctions were announced on January 15, 2025. The final VRR auction will occur on June 10, 2025. The notified amount for this auction is ₹25,000 crore.
Sandip Sabharwal highlights the positive impact of RBI's actions, including rate cuts and easing stress on unsecured loans, particularly benefiting MFIs and NBFCs. He favors larger banks and diversified NBFCs, cautioning against real estate investments at current valuations. The rare earth magnets issue from China poses a potential threat to the auto industry, especially EV manufacturers, pending resolution.
Prime Minister Narendra Modi on Monday highlighted India's rapid transformation across sectors, driven by the NDA Government's focus on good governance and inclusive growth.
Union Finance Minister Nirmala Sitharaman on Monday said that India is embracing a cashless revolution with world-class digital initiatives like unified payments interface (UPI).
Stocks rallied Monday on hopes that a fresh round of China-US trade talks later in the day will ease tensions between the economic superpowers, while investors were also cheered by forecast-topping US jobs data. The talks come days after Trump and Chinese counterpart Xi Jinping held their first publicly announced telephone talks since the US president returned to the White House.
Chinese consumer prices fell for the fourth straight month in May, data showed Monday, as the world's second biggest economy struggles with sluggish spending and global trade turmoil. The China-US talks in London will mark the second round of formal negotiations between the world's two largest economies since Trump launched his global trade blitz in April.
With the latest reduction, the RBI has now cut interest rates by a total of 100 basis points in 2025, starting with a quarter-point reduction in Feb - the first cut since May 2020 - and another similar-sized cut in April.
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