CRISIL Economy First Cut: Mint Road non-move eases financial conditions
Macroeconomics | First cut
Sucess Dialog
This is added to your favourites.
Warning Dialog
This is already added to your favourites.
sorry something went wrong.
Financial conditions in India eased in April after Reserve Bank of India (RBI) paused on rate hikes in its monetary policy. CRISIL’s Financial Conditions Index (FCI) eased to 0.3 in April from -0.2 in March.
The pause on rate hikes came as a surprise to most market participants. While the Monetary Policy Committee kept options open, inflation falling below its target threshold of 6% increased market bets of a pause during the monetary policy review in June. Market interest rates eased, and equities surged.
Global market sentiments stabilised after a bout of volatility because of regional banking issues in the US. In India, foreign portfolio investors increased their buying of shares.
External risks remain high because of the possible impact of elevated interest rates in advanced economies on the leveraged market segments. However, India’s macroeconomic fundamentals are expected to improve this fiscal, which should cushion its vulnerability to global shocks. This, coupled with a pause on rate hikes by the RBI and US Federal Reserve, should limit tightening of domestic financial conditions going ahead.
