The 12 agencies surveyed by the ET showed that most respondents lowered by 25 basis points on April 9, while nearly half of the participants decreased by 25 basis points during the June policy review. One basis point is 0.01 percentage point.
India’s retail inflation, measured by the Consumer Price Index (CPI), fell from 4.26% in January to 3.61% in February, showing data from the National Bureau of Statistics.
Global headwind
One basis point is 0.01 percentage point.
India’s retail inflation, measured by the Consumer Price Index (CPI), fell to 3.61% from 4.26% in January, showing data released by the National Bureau of Statistics (NSO) on Wednesday.
CPI fell to its target of under 4% for the first time in seven months.
Economists say such a sharp drop in CPI inflation provides policy makers with enough room to lower policy buyback rates for the second consecutive time in April. Those who are uncertain about further action in June cite global uncertainty such as tariffs and wild currency changes.
“We continue to expect to reach 75 basis points of the end rate of 5.50% by the end of 2025, cutting 25 basis points for everyone in April, June and August,” Sonal Varma, chief economist of India and chief economist of India, said in a note.
The money market and overnight index swap (OIS) segments have already started pricing as Rupee appreciates the 20 Paise closed at 87.01/$1 on Thursday.
According to data from the Indian Clearing Corporation (CCIL), the two-year OIS transaction price is 5.92%, while OIS transaction is 6.12%. OIS is an interest derivative contract where one party pays a fixed interest rate and another floating interest rate. The OIS market is usually priced at a price of about 25 basis points when traders expect the repurchase rate to be expected at a certain time.
Economists also felt comforted by the central bank’s active intervention in the market to relieve liquidity pressures, which many in the market see as the Reserve Bank of India’s intention to reduce borrowing costs.
The Reserve Bank of India has also injected lasting liquidity into the banking system through open market operations (OMO) purchases, totaling $20 billion in Dollar-Rupee trading exchanges.
