Indian economy held up amidst tariff policy uncertainties: RBI Bulletin
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Fibre2Fashion
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India's economic activity held up in June and July this year amid geopolitical tensions and tariff policy uncertainties, with improving kharif agricultural season prospects, continuation of strong momentum in the services sector and modest growth in industrial activity, an article in the latest issue of Reserve Bank of India (RBI) Bulletin said. The global macroeconomic environment remained fluid in the two months. Headline consumer price index (CPI)-based inflation remained below 4 per cent for the fifth consecutive month in June, driven by deflation in food prices, the article on the state of the domestic economy said. India's economic activity held up in June and July this year amid geopolitical tensions and tariff policy uncertainties, with improving kharif agricultural season prospects, continuation of strong momentum in the services sector and modest growth in industrial activity, an article in RBI Bulletin said. Headline CPI inflation remained below 4 per cent for the fifth consecutive month in June. System liquidity remained in surplus to facilitate a faster transmission of policy rate cuts to the credit markets. The external sector remained resilient, backed by ample foreign exchange reserves and a moderate external debt-to-gross domestic product ratio, it observed. Another article in the bulletin mentioned that a 10-per cent rise in global crude oil prices could raise India's headline inflation by around 20 basis points on a contemporaneous basis, as per empirical estimates. The increase in oil import dependency warrants measures not only to contain the spillovers to domestic prices, but also to gradually transit towards alternative sources of fuel for more efficient management of domestic fuel prices in the long run, the article on the oil price and inflation nexus in the country said. Fibre2Fashion News Desk (DS)
The Print
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Resilient trade partnerships present strategic opportunities: RBI bulletin
India is scheduled to sign a free trade agreement with the UK on Thursday. Prime Minister Narendra Modi has already left for London to witness signing of the comprehensive economic and trade agreement. It also said India's economic activities held up during June-July despite tariff policy uncertainties. Mumbai, Jul 23 (PTI) Building more resilient trade partnerships present a strategic opportunity for India to deepen its integration with global value amidst rising uncertainties and geo-economic fragmentation, Reserve Bank's bulletin said on Wednesday. New Delhi is also in discussion with Washington for a India-US free trade agreement. An article on 'State of the Economy' in the Reserve Bank's July Bullet said the global macroeconomic environment remained fluid in June and July so far amidst geopolitical tensions and tariff policy uncertainties. 'Domestic economic activity held up, with improving kharif agricultural season prospects, continuation of strong momentum in the services sector and modest growth in industrial activity,' it said. It further said that as intense negotiations are underway for closing trade deals before the new import tariff rates kick in from August 1, 2025, the focus is back on US trade policies and their spillover effects globally. The average trade tariff rates are set to touch levels unseen since the 1930s, the article said. Moreover, risk of imposition of new high tariffs looms large for additional sectors. The evolving pattern of global trade flows and supply chains are far from settled. These uncertainties pose considerable headwinds to global economic prospects. 'Amidst rising trade uncertainties and geo economic fragmentation, building more resilient trade partnerships presents a strategic opportunity for India to deepen its integration with global value chains,' it said. The article also noted that the headline retail (CPI) inflation remained below 4 per cent for the fifth consecutive month in June driven by deflation in food prices. System liquidity remained in surplus to facilitate a faster transmission of policy rate cuts to the credit markets. The external sector remained resilient, backed by ample foreign exchange reserves and a moderate external debt-to-GDP ratio. Easing inflation, improving kharif season prospects, front-loading of government expenditure, targeted fiscal measures and congenial financial conditions for faster transmission of rate reductions should support aggregate demand in the economy, going forward, it added. The central bank said that views expressed in this article are those of the authors and do not represent the views of the Reserve Bank of India. PTI NKD CS HVA This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
Economic Times
3 days ago
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Public sector banks slashed key rates more than private ones: RBI Monthly Bulletin
IANS Reserve Bank of India (RBI) Following the central bank's decision to cut the key repo rate by 100 basis points since February 2025, public sector banks have reduced their lending and deposit rates more than private sector banks, as per data released by the Reserve Bank of India on February-May 2025, weighted average lending rates on fresh loans for public sector banks reduced by 31 bps while private sector counterparts reduced it by 20 bps, followed by 49 bps by foreign banks. Meanwhile, for outstanding loans, public sector banks reduced the lending rate by 17 bps, along with private players easing rates by 15 bps. Foreign banks, however, slashed the weighted average lending rate on outstanding loans by 52 bps. The central bank's report also marked that the savings deposit rates of some public banks are prevailing at a historical low, since their de-regulation in 2011. The weighted average domestic term deposit rates on fresh and outstanding deposits moderated by 51 bps and 2 bps, respectively, during the same period. The six-member monetary policy committee has cut the policy repo rate by 50 bps between February and May. In June, the panel announced a further rate cut of 50 bps. One bp equals 0.01 per cent. "In response to the 100-bps reduction in the policy repo rate since February 2025, banks have adjusted their repo-linked external benchmark-based lending rates downward by 100 bps and marginal cost of funds-based lending rate by 10 bps," RBI bulletin stated. Consequently, the weighted average lending rates on fresh and outstanding rupee loans of scheduled commercial banks declined by 26 bps (domestic banks - 24 bps) and 18 bps (domestic banks - 16 bps), the rates on small savings schemes were kept unchanged by the Government of India during Q2 key point is the central bank's adjustment in Cash Reserve Ratio (CRR) for banks that led to significant adjustment in reserve money. The pace of expansion in money supply is now marginally higher as compared to last month. Credit growth of scheduled commercial banks accelerated to 10.4 per cent (y-o-y) as on June 27, 2025 (9.9 per cent (y-o-y) a month ago), mainly due to strong momentum bank credit growth continued to moderate across key sectors of the economy in May credit to NBFCs contracted in May 2025; however, NBFCs raised significant amount of debt from the capital markets via private placements, as stated in an article on state of the economy in RBI's July Bulletin."Personal loans, the main driver of banks' credit growth, also recorded a sharp deceleration, largely due to a decline in the growth of other personal loans, vehicle loans and credit card outstanding."Housing loans have majorly contributed to the growth of personal loans in the market. 'While overall credit to the industrial sector recorded a subdued growth due to a decline in credit growth to infrastructure, credit to the MSME sector continued to remain buoyant,' the report central bank, however, said the views expressed in the Bulletin article are of the authors and do not represent the views of the Reserve Bank of India.
