Manish Kumar Choudhary’s Post

Fed Cuts Rates by 50bps - What Does This Mean for India? The U.S. Federal Reserve has taken a bold step by cutting interest rates by 50 basis points, bringing the policy rate down to the 4.75%-5.00% range. This larger-than-usual reduction reflects growing confidence in inflation nearing the Fed’s 2% target and signals concern over the job market. However, the decision wasn’t unanimous—Governor Michelle Bowman preferred a more conservative 25bps cut. 💡 Impact on Indian Stock Markets & Economy History shows that Fed policy changes can significantly influence global markets, and India is no exception. As you can see in the image! Nifty has performed well during easing cycles and gave negative returns in tightening cycles! But, you must know how it will going to impact you as households?  👍Cheaper Loans and EMI Relief A rate cut in the U.S. might prompt the RBI to lower rates, translating into cheaper home, car, and personal loans for Indian households. Lower EMIs can ease financial stress, leaving more room for spending or saving.  👍Investment Gains Households with stock market exposure may benefit from potential market rallies, particularly in sectors like banking, infrastructure, and real estate.  👍Lower Returns on Savings With a potential RBI rate cut, returns on traditional savings instruments like fixed deposits might decrease, pushing households to seek higher returns in equities or mutual funds.  👍Inflationary Pressures While the short-term boost from easing is positive, prolonged liquidity injections may lead to inflation in the longer term, affecting essential goods and services.  👍Gain from opportunities Since market might face downturn in recent days so you can grab the opportunities of getting your watch-out list of stocks at discounted prices! How do you think Fed rate cut impact you?? Let me know in the comment box and stay tuned with Vipin Dixena for such more updates!

The Reserve Bank of India (RBI) revised its GDP growth estimate for FY25 to 6.6%, a 60-basis-point cut from its earlier forecast of 7.2%. This adjustment brings the RBI's outlook closer to the Finance Ministry's Economic Survey projection of 6.5%-7%, indicating a more cautious stance on India’s economic trajectory. The revision follows a significant slowdown in Q2 FY24, with GDP growth falling to 5.4%—the lowest in nearly two years and well below expectations of 6.5%. In addition, the RBI trimmed growth projections for Q3 and Q4 of FY25, reflecting concerns over specific sectoral weaknesses. 𝐊𝐞𝐲 𝐈𝐧𝐬𝐢𝐠𝐡𝐭𝐬: 1️⃣ 𝐒𝐞𝐜𝐭𝐨𝐫𝐚𝐥 𝐖𝐞𝐚𝐤𝐧𝐞𝐬𝐬, 𝐛𝐮𝐭 𝐎𝐩𝐭𝐢𝐦𝐢𝐬𝐦 𝐀𝐡𝐞𝐚𝐝 Economists like Rajani Sinha of CareEdge Ratings and Dharmakirti Joshi of Crisil suggest the Q2 slowdown is transitory and concentrated in a few manufacturing sectors. They expect growth momentum to pick up in the latter half of the year, driven by improved activity across broader sectors. 2️⃣ 𝐈𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐎𝐯𝐞𝐫 𝐆𝐫𝐨𝐰𝐭𝐡 A Policy Balancing Act Despite growth challenges, the RBI maintained its repo rate at 6.5%, prioritising inflation control. In October, retail inflation crossed the 6% tolerance limit, fueled by high food prices. RBI Governor Shaktikanta Das emphasised the importance of durable price stability for long-term growth. 3️⃣ 𝐅𝐨𝐨𝐝 𝐈𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐓𝐫𝐞𝐧𝐝𝐬  The central bank expects food inflation pressures to ease in Q4 FY25, supported by better harvests and sufficient cereal buffer stocks. However, it remains cautious about potential risks from adverse weather events and geopolitical uncertainties. 4️⃣ 𝐀 𝐍𝐞𝐮𝐭𝐫𝐚𝐥 𝐒𝐭𝐚𝐧𝐜𝐞, 𝐍𝐨𝐭 𝐀𝐜𝐜𝐨𝐦𝐦𝐨𝐝𝐚𝐭𝐢𝐯𝐞 𝐘𝐞𝐭 The RBI retained its neutral monetary stance, signalling flexibility in rate adjustments. Analysts believe this reflects the bank’s confidence that economic activity bottomed out in Q2 and will recover. While some hoped for rate cuts to stimulate consumption, especially in segments like affordable housing, the RBI chose to stay cautious. 𝐖𝐡𝐚𝐭 𝐋𝐢𝐞𝐬 𝐀𝐡𝐞𝐚𝐝? The continued focus on inflation underscores the RBI’s challenge in balancing growth and price stability. With economic recovery expected in the latter half of FY25, stakeholders will be watching closely for signals of policy shifts. Rate cuts, if introduced, could provide much-needed relief to consumers and boost key sectors like real estate and private consumption. This calibrated approach by the RBI highlights its commitment to navigating India’s evolving economic landscape. What are your views on the RBI policies? Follow AC Agarwal for more market updates! #rbi #economy #india #banking #financial

Understanding the recent 50 bps Rate cut by US Fed - On September 18th, the US Fed announced the 50 bps rate cut and everyone in the financial world is talking about it. Here is my takeaway from the decision: What is the Federal funds rate?  In simple terms, it is the rate banks charge each other for short term loans to meet their reserve requirement. Similar to Repo rate in India. What is the current Federal funds rate? 4.75%-5% How does the rate affect a normal citizen?  Fed rate cuts can make citizens increase their discretionary spendings. Mortgages and Loans become easier for citizens as the interest rate gets lower. Do we expect the same in India by RBI?  According to the data, rural demand in India has been growing after a long time indicating inflation is under control and CPI Inflation is also under much better control, with it being around 8% in September 2022 and now it being around 5%. This being stated, RBI can match with the similar cut done by Fed or remain as they are. Impact on the Indian economy?  Firstly a rate cut usually results in weakening US dollar, as investors park their money in higher interest rate environments like India and leading INR to appreciate.  Appreciation of INR making imports cheaper which helps to reduce the higher imported inflation. Impact on the Indian Stock market?  Increased capital inflows as FIIs park their money in Indian companies. Also reduction in rates leads to higher borrowing and investments. IT and Consumer durables are the sectors highly positively affected by rate cuts as they see higher inflows from FIIs and DIIs. 

📊  𝐑𝐁𝐈 𝐭𝐨 𝐌𝐚𝐢𝐧𝐭𝐚𝐢𝐧 𝐒𝐭𝐚𝐭𝐮𝐬 𝐐𝐮𝐨 𝐨𝐧 𝐑𝐞𝐩𝐨 𝐑𝐚𝐭𝐞 𝐀𝐦𝐢𝐝𝐬𝐭 𝐇𝐢𝐠𝐡 𝐅𝐨𝐨𝐝 𝐈𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐑𝐨𝐛𝐮𝐬𝐭 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐆𝐫𝐨𝐰𝐭𝐡📊 RBI’s Monetary Policy Committee (MPC) meeting on June 7, all eyes are on the central bank's policy stance. Here are the key takeaways from the latest developments: 𝐏𝐨𝐥𝐢𝐜𝐲 𝐑𝐚𝐭𝐞𝐬 𝐔𝐧𝐜𝐡𝐚𝐧𝐠𝐞𝐝: For the 16th consecutive month, the Reserve Bank of India (RBI) is expected to keep the policy interest rates steady at 6.50%, according to an ET poll of 14 respondents. This will mark the eighth consecutive policy review with no change in the benchmark repo rate. 𝐈𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐕𝐢𝐠𝐢𝐥𝐚𝐧𝐜𝐞: Despite the headline Consumer Price Index (CPI) inflation easing to 4.83% in April, food inflation surged to a four-month high of 8.7%. The recent heatwave and risks of lower crop production due to depleting water levels are significant concerns. 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐆𝐫𝐨𝐰𝐭𝐡: India’s GDP growth exceeded expectations, hitting 7.8% in the January-March quarter, leading to an impressive full-year growth rate of 8.2% for FY24. This robust growth trajectory suggests that the economy does not currently require lower borrowing costs to boost demand. 𝐌𝐨𝐧𝐞𝐭𝐚𝐫𝐲 𝐒𝐭𝐚𝐧𝐜𝐞: The RBI is expected to maintain its stance of withdrawal of accommodation, signaling a cautious approach due to volatile food prices and geopolitical risks affecting oil prices. The policy commentary will likely balance recent inflation stability with the potential impact of extreme weather events. 𝐑𝐚𝐭𝐞 𝐂𝐮𝐭 𝐏𝐫𝐨𝐣𝐞𝐜𝐭𝐢𝐨𝐧𝐬: Goldman Sachs has pushed back its projection for an RBI rate cut to Q4 CY24, anticipating a shallow easing cycle of 50 basis points spread over Q4 CY24 and Q1 CY25. 🔍 𝐖𝐡𝐚𝐭 𝐓𝐡𝐢𝐬 𝐌𝐞𝐚𝐧𝐬 𝐓𝐨 𝐔𝐬: The RBI’s focus on maintaining stability and anchoring inflation expectations indicates a careful approach to monetary policy. Businesses and consumers should prepare for a continued period of steady borrowing costs, with a possible easing of rates only towards the end of 2024. Stay informed and plan accordingly to navigate the evolving economic landscape. 🌐💡 #RBI #MonetaryPolicy #CorporateFinance Source: The Economic Times Stay tuned for more updates Soumya Dey

🚨The Reserve Bank of India (RBI) has released its latest monetary policy decisions, striking a balance between fostering economic growth and managing inflation: here are some key highlights 🚨 ✅ Repo Rate Maintained: The repo rate remains unchanged at 6.5% for the 11th consecutive meeting. Stability remains the focus amidst global and domestic challenges. ✅ CRR Cut: A 50-basis-point reduction in the Cash Reserve Ratio (CRR) to 4% will inject liquidity worth ₹1.16 lakh crore into the banking system. The move aims to lower market interest rates and support credit growth, especially in key sectors like housing and infrastructure. 📊 Growth & Inflation Outlook: GDP Growth Projection: Revised downward to 6.6% for FY2024-25 (from 7.2%). Inflation Forecast: Adjusted to 4.8%, reflecting ongoing vigilance over price stability. 🛠 Why It Matters: The CRR cut is phased (Dec 14 & 28) to ensure gradual liquidity release, addressing current economic headwinds. With GDP growth slowing to 5.4% (July-September) and inflation hitting 6.21% in October, the RBI’s measures aim to navigate a challenging environment effectively. 📈 Analyst Take: These actions indicate a cautious optimism—supporting growth while keeping inflation under check. The move to boost liquidity should positively impact borrowing and investment. What are your thoughts on today’s announcement? Do you see this as a step in the right direction for India’s economic trajectory? #RBI #MonetaryPolicy #Economy #Liquidity #Inflation #Growth ✅

Inflation vs. Interest Rates: A Complex Relationship As an MBA student delving into the details, I have been fascinated by the delicate balance between inflation and interest rates. These two economic indicators are inseparably linked, influencing everything from investment decisions to monetary policies. Understanding the Dynamics: Inflation: The sustained increase in the general price level of goods and services over time. Interest Rates: The cost of borrowing money. As of August 2024, the Reserve Bank of India (RBI) has maintained its benchmark repo rate at 6.5% for the ninth consecutive meeting.This is to ensure that inflation is reduced towards its medium-term target of 4%, while also supporting growth. The RBI's tolerance band for inflation is 2% points from 4%. In the U.S., the Federal Reserve targets an average inflation rate of 2% over time. When inflation is falling and economic growth is slowing, central banks may lower interest rates to stimulate the economy When inflation rises, central banks often raise interest rates to curb spending and slow down the economy. On the other hand, when inflation is low, interest rates may be lowered to stimulate economic growth. Current Scenario: Given the recent inflationary pressures, many central banks have been tightening monetary policies by increasing interest rates. This has implications for various financial markets, including: Bond Market: Rising interest rates typically lead to falling bond prices. Stock Market: Higher interest rates can impact corporate profitability and investor sentiment. Currency Market: Changes in interest rates can influence exchange rates. How do you perceive the current relationship between inflation and interest rates? Do you believe central banks are striking the right balance in their monetary policies? #finance #economics #investment #interestrates #inflation #financialmarkets

The four critical questions facing the Reserve Bank of India (RBI) in its inflation fight are as follows: 1. Will the RBI Adjust Interest Rates? The RBI has maintained the repo rate at 6.5% for several consecutive meetings. This cautious approach is meant to balance inflation control with economic growth. The RBI expects inflation to gradually decrease but stresses the need for a cautious and actively disinflationary approach to align inflation with the 4% target [[❞]](https://lnkd.in/dqS-cxUm) [[❞]](https://lnkd.in/ddKRYqjz). 2. How Will the RBI Address Rising Food Prices? Surging food prices have significantly impacted headline inflation. For example, in June, retail inflation rose to 4.81%, breaking a previous trend of easing. This rise complicates the RBI's efforts to reduce inflation and diminishes the likelihood of a near-term rate cut [[❞]](https://lnkd.in/ddKRYqjz). 3. What Impact Will Global Economic Conditions Have? The global economic environment, including actions by other central banks and geopolitical tensions, significantly influences the RBI's policy decisions. The RBI must remain cautious about external shocks that could impact domestic inflation and economic growth [[❞]](https://lnkd.in/ddKRYqjz). 4. How to Foster Domestic Economic Activity? The RBI is focused on maintaining the resilience of domestic economic activity, particularly in the services sector. High-frequency indicators suggest ongoing expansion, although there is some moderation. The RBI encourages the private sector to capitalize on growth opportunities in manufacturing and services, contributing to overall economic stability and growth [[❞]](https://lnkd.in/ddKRYqjz). These questions highlight the complexities and challenges the RBI faces in steering monetary policy to ensure inflation remains within target while also supporting sustainable economic growth.

The Real Test for RBI Begins: Stellar Performance So Far, But Rate Cuts May Have to Wait for much longer! The Reserve Bank of India (RBI) has proven to be one of the best-performing central banks globally, skillfully managing inflation, stabilizing the rupee exchange rate, and controlling deficits—all while maintaining a steady growth trajectory for the Indian economy. Despite these achievements, the RBI may still have to delay its rate cuts, likely pushing the first cut from December 2024 to February 2025. Here’s why the wait may be necessary: 1. Pressure on the Indian Rupee: With global financial markets showing volatility, especially with the U.S. dollar strengthening, any rate cut by the RBI could further weaken the Indian Rupee. This adds pressure on imports, which may lead to higher inflation—a risk the RBI is keen to avoid. 2. Investment Inflows Impact: Higher rates in India help attract foreign investment. With recent growth signals in areas like GST revenue, manufacturing, and vehicle sales, maintaining the current rate can sustain these inflows, supporting India’s economic momentum amid global uncertainty. 3. Asset Prices and Inflation Control: Inflation remains a concern, with CPI rising to 5.5% in September and anticipated to climb further due to food prices. Cutting rates too soon could spur asset price inflation, impacting affordability in sectors like housing and creating broader inflationary pressures. India’s steady rate stance reflects a careful approach to maintaining economic stability. The RBI’s approach underscores a commitment to balancing growth with stability, showing that sometimes, waiting is the best strategy. While rate cuts are anticipated in early 2025 my personal sense is we will have to wait for way longer than Q125, of course the focus now is on managing inflation and sustaining growth amid global headwinds. Credit: Insights and data sourced from HSBC Economic Research, November 2024.

RBI to retain interest rates in August due to high inflation: Reuters poll of economists https://lnkd.in/gd_vMZsH #India #RBI #inflation #interest #interestrate #reporate #foodprices #economy #august

🌏 Why the RBI Isn’t Cutting Rates: A Story of Balancing Growth & Inflation The Reserve Bank of India (RBI) has chosen to hold the repo rate steady, walking a tightrope between controlling inflation 🔥 and supporting economic growth 📉. Here’s an easy-to-understand breakdown of what’s happening and how it affects you as an investor. --- 🔍 The RBI’s Dilemma: Inflation vs. Growth 💡 Why Inflation is a Big Problem: 📊 Food Inflation is Soaring: Averaging 8.3% this year despite a good monsoon. 🏡 Rural India Feels It the Most: Effective inflation for the poorest rural households is 5.4%, straining their already tight budgets. 💡 Why Not Cut Interest Rates? 🏦 More Borrowing = Higher Inflation: Lowering rates can flood the market with money, leading to riskier lending and increased spending – both pushing inflation up. 📉 Growth is Already Slowing: India’s GDP growth is down to 6.6% this year from 8.2% last year. 💡 Global Pressures: 🌍 The Global Context: While the US Fed and ECB have cut rates recently, the RBI is cautious about external shocks. --- 🍲 Food Inflation: More Than Just Numbers 🔥 Why Food Prices Matter: Food inflation drives rural inflation 🚜, impacting the most vulnerable. Despite the government’s 80-crore free ration scheme, prices are still rising. 🛑 The Human Cost: Inflation hits the poor hardest, increasing hunger, inequality, and even social unrest. --- 💹 What Does This Mean for Investors? 🔄 Expect Sideways Markets With growth slowing and inflation high, markets are likely to remain flat for now. But this isn’t a reason to panic! 📈 Hold for Rebounds Sectors like small finance and fintech are at the bottom of their cycle due to RBI’s crackdown on risky lending. This might be the time to hold and wait for growth. 🌟 Stay Grounded in Reality India’s economic disparity is stark: 85% of households earn less than ₹20,000/month. Only 2% are direct taxpayers. --- 💭 Final Thoughts The RBI’s decision isn’t just about numbers; it’s about balancing growth and ensuring the most vulnerable are not left behind. For investors, patience is key in this phase. While markets may stay flat, long-term opportunities are just around the corner. 💬 What’s your take on the RBI’s cautious approach? Let’s discuss! #Economy #RBI #Investments #Inflation #Growth