Business News

Mumbai: Some economists are batting for an outsized rate cut-of half a percentage point instead of the customary quarter-as future price pressures appear benign and credit demand remains subdued.Economists from the State Bank of India and Piramal Enterprises are advocating a 50-basis-point (bps) reduction in the policy rates, due to be announced after the latest bi-monthly review Friday morning, even though an ET survey of a dozen bankers and economists indicates a 25 bps cut.One basis point is a hundredth of a percentage point.Currently, the repo rate-or signaling rate-stands at 6% after the central bank reduced it twice this year, by 25 bps each in February and April.Proponents of a larger rate cut by the monetary policy committee (MPC) believe doing so would revive the credit cycle and boost economic momentum."We expect a 50-bps rate cut in the June policy as a jumbo rate cut could act as a counterbalance to uncertainty," Soumya Kanti Ghosh, group chief economic advisor, SBI, wrote in his latest research report.Similarly, Debopam Chaudhuri, chief economist, Piramal Enterprises said: "The MPC should consider a larger-than-expected 50 bps rate cut this time...A 50-bps cut now could help make up for that lost time and deliver a stronger boost to economic growth."India's fourth-quarter gross domestic product (GDP) expanded at a faster-than-expected rate of 7.4% in the fourth quarter, lifting full-year growth to 6.5% and helping New Delhi retain the tag of the world's fastest-growing major economy. However, demand growth has been uneven, with now-eased regulatory curbs on unsecured loans denting retail credit demand. Cheaper Credit"Weak external and urban demand along with high real rates are a drag on growth," said a research report by ICICI Bank. "An additional 50bps rate cut would ensure lower borrowing costs and is a stimulus to push growth higher."Justifying a bigger rate cut, SBI's Ghosh said inflation is expected to stay within the mandated legal band. His report stated that inflation would stay below the target inflation of 4% in FY26 until December, but may increase thereafter.Since February, the consumer price index (CPI) has been below 4%. In the last monetary policy, the RBI had estimated consumer inflation at 4.2% for FY26."Lower food prices should drive CPI inflation to 3.6% in FY26 before it inches again to 4.1% in FY27, which opens up room for pushing repo rate to 5.5% implying real rate of 1.5% over FY27 and Q4FY26," said the ICICI Bank report.SBI's Ghosh is of the view that a 50 bps reduction in the June policy could reinvigorate a credit cycle. Bank loans climbed 12.1% in 2024-25, lower than 16.3% the year before. SBI expects credit and deposits to advance in the range of 10%-11% during FY26.Piramal's Chaudhuri said the MPC should consider a larger-than-expected 50 basis point rate cut this time.

New York Circle Internet Group shares surged as much as 235% after the company and some of its shareholders raised nearly $1.1 billion in an initial public offering that was upsized twice amid strong demand. Shares of the stablecoin issuer climbed to as much as $103.75 on Thursday, versus an IPO price of $31 each. The stock, which was halted several times for volatility, was trading at $94.54 in New York.If the stock closes at or near its peak, it would mark the largest first-day pop for a US IPO raising more than $100 million since CureVac NV in 2020. CureVac's shares closed 249% higher in debut and continued to soar before disappointing Covid-19 vaccine data drove a collapse in the biotech's stock price.The offering of 34 million shares by Circle and backers including co-founder and Chief Executive Officer Jeremy Allaire was increased from 32 million shares, and had been marketed at $27 to $28 each.

The government has decided to discontinue Bharat brand products as prices of essential food items such as wheat, rice and pulses have stabilised, with food inflation falling to 1.78% in April from 8.7% a year ago.With this, the Centre has made the Bharat brand, a label it launched in 2023 to provide food grains and other essential food items to the middle class at subsidised prices, a periodic tool for price stabilisation instead of a perennial product."We have decided to discontinue the Bharat brand products as prices of all major food items have come down because of increase in production," said a senior government official from the consumer affairs, food and public distribution ministry, who did not wish to be identified.Retail stores owned by government agencies - National Agricultural Cooperative Marketing Federation of India (NAFED) and National Cooperative Consumers' Federation of India (NCCF) - have stopped selling Bharat Atta, Bharat Rice and Bharat dals in their stores.India has produced record rice, wheat and maize in the 2024-25 kharif season, according to the agriculture and farmers' welfare ministry's second advance estimates of production of major agricultural crops. Production of major pulses - tur, gram and lentils - has also gone up compared to the previous season, bringing prices under control.The forecast of a good monsoon during the June-September period has led to expectations of a robust production which will help keep prices under check. "There does not seem to be an immediate need to sell food at subsidised prices," the official said.The cost of home-cooked vegetarian and non-vegetarian thalis declined by about 6% each year-on-year in May, said ratings agency Crisil in its latest 'Roti Rice Rate' report. However, there is a possibility of launching the next phase of the brand in case prices go up in the future or if the government's procurement of a certain item increases, the official said.