Hike rates

Slowing deposit growth will force banks to raise rates: RBI

MUMBAI (Reuters) – Banks will be forced to raise deposit rates in coming months as credit growth far outpaces deposit growth, according to a report from the Reserve Bank of India on Saturday. He said the economic outlook has brightened and the conditions for a high and sustainable growth path have strengthened, thanks to normal monsoon and stabilizing inflationary pressures. On the rupee, the report co-authored by RBI deputy governor Michael Patra That said, there is a need to closely and continuously monitor the worsening trade deficit and portfolio outflows.
This is despite strong reserve cushions, moderate external debt, and a “fairly priced exchange rate that has withered less from the monotonous strengthening of the US dollar than many peers.” Data from the RBI Bulletin revealed that RBI bought $10 billion worth of currencies and sold $8. 1 billion in May 2022, leading to a net purchase of $2 billion in May.
“The Indian economy remains resilient in the face of formidable global headwinds. The ripple effects of the geopolitical fallout are visible across multiple sectors, slowing the pace of recovery. Despite this crushing shock, there are sparks in the wind igniting the innate strength of the economy and put it on track to become the fastest growing economy in the world,” he said. “If the moderation in commodity prices seen in recent weeks continues as supply chain pressures ease, the worst of the recent inflation spike will be left behind, allowing the Indian economy to escape the global inflation trap. . . “, says the report.