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i360 Indices

UFI-05.06.22

ICICI Bank’s weekly UFI1 had a marginal moderation to 111.4 vs. 111.8 the week before. 

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05 Jun 22 09:00 AM

CENTRAL BANK ZONE

Reserve Bank of India

MPC kept the repo rate unchanged at 6.50% (4:2 vote versus 4:1 earlier) with policy stance retained at ‘Neutral’. However, CRR was cut by 50bps to 4% to support liquidity. Growth projection for FY25 has been revised lower to 6.6% (7.2% earlier) with growth now projected at 7% in H2 as against 7.4% earlier. While high frequency indicators point to recovery, growth is expected to settle around 6.5% in H2 thus implying FY25 growth at 6.3%

Even as RBI has been revising growth projections lower, inflation projections have been getting revised higher due to food inflation. Q3 inflation is now projected at 5.7% and Q4 at 4.5% with H1 inflation settling at 4.3% (4% earlier). This trajectory is far more likely and implies real rate of 2%. Durable and system liquidity backdrop has changed from Oct when both peaked at INR 4.9tn and INR 2.7tn respectively because of FX outflows. Given demand for currency in Q4, RBI has injected durable liquidity via CRR cut. Given large short forward positions, more may have to be done later

RBI Governor emphasized on timing of policy making and restoring balance between growth and inflation. We believe Feb would be an opportune time for MPC to cut rates by when inflation would be moving in-line with projections and growth could have some downward bias. We see a shallow (50bps) rate cut cycle. What can delay rate cuts? First, another food price shock. Second, global events (higher US yields, stronger dollar and FPI outflows) could turn adverse

Federal Reserve

In its policy meeting in September, the FOMC eased policy rates by 25bps in November while it maintained its data-dependent guidance. The Fed Chair emphasized that more easing could be required to bring the policy rate towards its neutral level.

The FOMC is expected to cut rates by 25bps in the December policy meeting, although it remains a close call. The FOMC is expected to signal to the market that it will resort to a staggered easing path.

We expect aa further cumulative 100bps worth of easing over 2024 and 2025 resulting in a terminal rate of 3.50%-3.75%

Bank of England

In its policy meeting in November, the BoE cut policy rates by 25bps and re-affirmed that it will resort to a staggered easing profile.

In its next policy meeting in December, the BoE is expected to maintain status quo while providing an unchanged guidance.

The BoE is expected to cut rates by a cumulative 100bps over 2025 and a further 50bps over 2026.

European Central Bank

In the policy meeting in October, the ECB cut rates by 25bps while it maintained its data-dependent guidance. However, it indicated that further easing could continue reflecting concerns about the growth outlook.

In its policy meeting in December, concerns about disinflation and growth could prompt the ECB to cut rates by 25bps.

Our base-case for the ECB the policy rate by a further cumulative 125bps resulting in a terminal rate of 1.75%.

People's Bank of China

The PBoC announced: (a) a reduction in the seven day repurchase reference rate by 30bps, (b) cut in the one-year MLF rate by 30bps, (c ) cut in the RRR by 50bps with a possibility of a further 50bps cut, (d) excluding rural banks from RRR and (e ) cut in the minimum down-payment ratio from 25% to 15%.

We expect a further 25bps-50bps worth of rate cuts and RRR cuts of an additional quantum of 50bps in the seven day repurchase agreement.

MARKET EVENTS CALENDAR

Events

17th Nov

Events

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View ALL Reports

TREASURER'S CORNER

Prasanna Balachander

Group Head – Global Markets – Sales, Trading and Research

Nakshatra – An insightful and engaging discussion on economy and market trends with the industry stalwarts

18 Dec 24 03:05 PM Exclusive Videos

Panel Discussion on India: Scripting a Growth Story

02 Dec 24 03:05 PM Exclusive Videos

Market Outlook & ICICI Direct Tools

16 Nov 24 03:05 PM Exclusive Videos

Rupee to depreciate 6-8% during Trump 2.0.

16 Nov 24 03:05 PM Exclusive Videos

Views on the global economy and markets by Mr. B. Prasanna

05 Oct 24 06:05 PM Exclusive Videos

{"GLOBAL FX PROJECTIONS":[{"title":"USD/INR","first":"84.00-85.00","second":"84.00-85.00","third":"84.50-85.50","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"EUR/USD","first":"1.05-1.07","second":"1.04-1.06","third":"1.03-1.05","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"GBP/USD","first":"1.26-1.28","second":"1.25-1.27","third":"1.24-1.25","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"USD/JPY","first":"152.00-154.00","second":"154.00-156.00","third":"156.00-158.00","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"AUD/USD","first":"0.64-0.66","second":"0.64-0.66","third":"0.62-0.64","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"USD/CNY","first":"7.20-7.25","second":"7.25-7.30","third":"7.30-7.35","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"}],"INDIA INTEREST RATES":[{"title":"Repo rate (%)","first":"6.50","second":"6.25","third":"6.00","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"SDF (%)","first":"6.25","second":"6.00","third":"5.75","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"10-year benchmark (%)","first":"6.80","second":"6.60","third":"6.50","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"}],"GLOBAL RATES":[{"title":"UST 2 year (%)","first":"4.20-4.40","second":"4.00-4.20","third":"4.00-4.20","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"UST 10 year (%)","first":"4.20-4.40","second":"4.20-4.40","third":"4.25-4.45","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"German bund 10 year (%)","first":"2.20-2.40","second":"2.10-2.30","third":"2.00-2.20","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"JPY 10 year (%)","first":"0.95-1.15","second":"1.10-1.30","third":"1.30-1.50","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"UK 10 year (%)","first":"4.30-4.50","second":"4.20-4.40","third":"4.10-4.30","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"}],"COMMODITIES":[{"title":"Brent crude (USD/bbl)","first":"75","second":"74","third":"72","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"},{"title":"Gold (USD/oz)","first":"2680","second":"2740","third":"2800","monthrangeone":"Q42024","monthrangetwo":"Q12025","monthrangethree":"Q22025"}]}

IN-HOUSE VIEWS

Last updated: 6 December 2024

Q42024

Q12025

Q22025

This content is issued by ICICI Bank Limited ("ICICI Bank") for generic educational, and information purposes only, and is not intended to replace independent professional judgment. The views and opinions expressed herein, are those of the individual authors/speakers/contributors and do not necessarily reflect the official policy or position of ICICI Bank or the position of any other agency, organisation, employer or company. ICICI Bank may make business decisions that may be at odds with the positions expressed herein. With regards to the information contained herein, ICICI Bank shall not be held responsible for any inaccuracies or omissions, or for any claims, losses or damages arising in any way from or in connection with errors or omissions in any information presented by the authors/speakers/contributors. ICICI Bank makes no accuracy or reliability or warranty of any kind, express or implied, in relation to the information contained herein, or any view, position or information contained therein, or presented by the authors/speakers/contributors. The information contained herein, may include links to third-party resources and websites. These links are provided for your convenience only and do not signify that ICICI Bank endorses, approves or makes any representation or claim regarding the accuracy, copyright, compliance, legality, security, suitableness, the absence of viruses or malware, or any other aspects of the third-party resources or websites.

Any information contained herein, should not be construed as an offer, invitation, solicitation, solution or advice of any kind to buy, sell or otherwise invest or deal in any securities, financial products/instruments or services offered by ICICI Bank or any other entity/person. ICICI Bank or any of its employees, officers and agents are not acting as your financial adviser or in a fiduciary capacity in respect of this proposed transaction with you unless otherwise expressly agreed by us in writing. This content is generic and does not take into account your personal circumstances. Before entering into any transaction related to the information contained herein, you should take steps to ensure that you understand the transaction and have made an independent assessment of the appropriateness of the transaction in the light of your own objectives and circumstances, including the possible risks and benefits of entering into such transaction and should seek your own financial, business, legal, tax and other advice regarding the appropriateness of entering into such transactions.

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LATEST INDIAN MARKET UPDATES

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i360 Indices

CENTRAL BANK ZONE

MARKET EVENTS CALENDAR

Events

Events

TREASURER'S CORNER

Prasanna Balachander

IN-HOUSE VIEWS

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