The Reserve Bank of India has held interest rates steady for eight consecutive times! Future interest rate cuts will still depend on the Federal Reserve.

Gelonghui Finance ·  Jun 7 14:05

The stock market rebounded for three consecutive days.

There has been increased attention to India in the market.

Today, as scheduled, the Reserve Bank of India kept its benchmark interest rate unchanged for the 8th consecutive time.

After the announcement, the Indian stock market continued to rise, with the Indian Nifty 50 index rising 0.89% to 22,821.4 points and the Indian Sensex 30 index rising 0.95% to 75,790.08 points. Slightly lower Indian government bond yields, with the benchmark 10-year bond yield rising 1 basis point to 7.027%. There was almost no change in the Indian rupee exchange rate.

In the domestic ETF market, the Indian Fund LOF rose 0.59%, with the latest net value of 1.54; the Dividend Indian Stock (QDII) rose sharply by 2.8%, with the latest net value of 1.4775.

Raised the economic forecast for the current fiscal year to 7.2%.

On Friday, the Reserve Bank of India kept the benchmark repo rate unchanged at 6.5% with a vote of 4 to 2, as expected. The monetary policy committee also decided to maintain a strong stance on the "withdrawal of loose policies". In a statement, Reserve Bank of India Governor Shaktikanta Das said the central bank wants to ensure that the inflation rate is consistent with the 4% target. Das also said the Indian economy remains resilient and manufacturing activity is expected to grow, and consumption is expected to recover. At the same time, the Reserve Bank of India raised its GDP growth forecast for fiscal year 2024-2025 (ending March 2025) from 7% to 7.2% and maintained its inflation forecast at 4.5%.

Analysts believe that India's economy is still strong and rapid expansion will provide enough room for the central bank to focus on price stability. In the last fiscal year, India's GDP growth rate exceeded 8% and the April inflation rate exceeded 4.83%, higher than the central bank's 4% target.

Possible rate cut following the Fed

Recently, due to the black swan event of the election and the stock market hitting a new high, the market's attention to India has increased.

On June 3rd, the market expected the party of the current prime minister of India to win an overwhelming victory in the election. The stock market rose sharply, and India's Nifty 50 and SENSEX 30 index both hit new highs in intraday trading. On June 4th, the Modi party won with a slight advantage lower than expected, triggering a large decline in the Indian capital market, with the stock index plummeting by 8% at one point. However, after experiencing panic selling, the stock market continued to rise in the past three trading days and approached the new high on June 3rd. Economists believe that due to this election result, the Modi government may face pressure to increase welfare spending to consolidate support, which may further stimulate inflation. Looking ahead, Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, believes, "The Reserve Bank of India's current interest rate and stance are in line with market expectations, but the divergence in voting patterns suggests that the likelihood of the bank's policy turning is increasing." Currently, economists expect the Reserve Bank of India to cut interest rates in the last quarter of this year and believe it may only take action after the Fed's turn.

Bonds should be translated as bonds.

MMF should be translated as mmf.

QDII should be translated as qdii.

Stocks should be translated as stocks.

Exchange rates should be translated as exchange rates.

Capital markets should be translated as capital markets.

Consumer should be translated as consumer.

India should be translated as india.

Index should be translated as index.

ETF should be translated as etf. ICBCCS Indian Market Fund (LOF) (CNY) should be translated as ICBCCS Indian Market Fund (LOF) (CNY). Trade should be translated as trade.

The translation is provided by third-party software.

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