Households feel inflation is Short-duration funds to attract interest post CRR Bad loan provisions increased in March quarter

easing in short and medium cut amid microfin stress

term: RBI Survey The RBI’s recent policy measures, including a 50 Loan loss provisioning by Indian banks rose in
bps repo rate cut and a 100 bps reduction in the Mar’25, driven by stress in microfinance portfolios.
According to the RBI’s May cash reserve ratio (CRR), are expected to boost For 29 banks, NPA provisions increased 8.3% QoQ
2025 “Inflation Expectations returns from short-to-mid-duration debt funds. to Rs. 25,242.9 crore and 9.2% YoY—marking the
Survey of Households,” Indian The CRR cut is set to release Rs. 2.5 lakh crore second consecutive annual rise. Private banks led
households witnessed a slight liquidity, benefiting funds with tenures between 3 with a 26.4% YoY increase, while PSBs remained flat
easing in their inflation months to 3 years, says CIO of fixed income at LIC due to a reversal by IDBI Bank. Notably, 22 banks
Mutual Fund. Experts also anticipate short-term reported YoY increases—the highest in 13 quarters.
perception.
yields to fall by 25-50 bps due to surplus liquidity, While stress in unsecured loans has eased,
The median perceived inflation
while longer-term bonds face profit booking. Axis microfinance stress persists. Analysts expect near-
rate declined by 10 bps to 7.7% Mutual Fund predicts 10-year bond yields will term pressure, but asset quality may improve as
in May’25, from 7.8% in trade between 6.00%-6.40% over the next six new MFIN norms take effect in H1FY26, with credit
Mar’25. While the 3 month months. costs likely easing in H2FY26.
ahead expectation remained
unchanged at 8.9%, the 1 year Source: Economic Times
Source: Financial Express https://economictimes.indiatimes.com/industry/banking/
ahead expectation moderated https://www.financialexpress.com/business/banking- finance/banking/bad-loan-provisions-increased-in-march-
by 20 bps to 9.5%, indicating a finance/short-duration-funds-to-attract-interest-post- qtr-amid-microfin-stress/articleshow/121711456.cms
crr-cut/3872901/
softening in the inflation
sentiment.
The survey, covering 6,079 FDI through govt route sees big jump
valid responses across 19 Foreign Direct Investment (FDI) under the government approval route surged by 277.6% y-o-y to USD 2.20
major cities, revealed a broad billion in 2024–25, indicating rising interest in acquiring existing shares. Total FDI for such acquisitions rose to
decline in the inflation USD 13.1 billion from USD 12.0 billion a year earlier. Sectors like defence, aviation, banking, and telecom still
expectations across key require government nod under certain limits. The services sector emerged as the top recipient, attracting
product categories like food, USD 9.34 billion or 18% of total inflows. Despite stricter scrutiny for countries sharing land borders, their FDI
non-food items, household remains negligible. Overall, the automatic route continues to dominate, accounting for USD 34.6 billion of
the USD 50.0 billion total FDI.
durables, housing, and
services. Source: Financial Express
https://www.financialexpress.com/policy/economy/fdi-through-govt-route-sees-big-jump/3872912/
Notably, fewer respondents
anticipated price rises RBI’s surprise rate, CRR cuts may accelerate banks’ earnings recovery: Analysts
compared to the previous
The RBI’s surprise 50 bps repo rate cut and a 100 bps CRR cut, to be implemented in phases from September
survey round. Around 55% of
6, are expected to accelerate the bottoming out of banks’ net interest margins (NIMs) and aid a quicker
households still expect food earnings recovery. Analysts expect the CRR cut to ease NIM pressure by 7–9 bps and improve monetary
prices to rise more than the transmission by releasing Rs. 2.5 lakh crore into the system. While Q2FY26 may see peak NIM pressure, the
current rate, while impact is expected to ease as deposit rates reprice. Large banks could benefit from better CASA momentum
expectations over the next and improved liquidity confidence, supporting earnings and valuations.
three months remained Source: Economic Times
highest for food (82.8%), https://economictimes.indiatimes.com/industry/banking/finance/banking/rbis-surprise-rate-crr-cuts-may-accelerate-
banks-earnings-recovery-analysts/articleshow/121711884.cms
followed by housing (78.3%)
and non-food items (75.3%). China CPI inflation falls for 4th straight month in May; PPI weakest in 2 yrs
Source: Economic Times
https://economictimes.indiatimes. China’s CPI inflation declined 0.1% y-o-y in May’25, marking the fourth consecutive month of deflation and
com/news/economy/indicators/ho signaling weak domestic demand. M-o-M CPI dropped 0.2%, reversing April’s slight rise. Despite the Labour
useholds-feel-inflation-is-easing-in- Day holiday, consumer spending remained subdued. The PPI contracted 3.3% YoY, the sharpest decline in 22
short-and-medium-term-rbi-
months, due to falling overseas orders and sluggish local demand, largely impacted by ongoing U.S. tariffs.
survey/articleshow/121692753.cm
Ahead of U.S.-China trade talks in London, hopes for tariff relief have risen.
s Source: Investing
https://www.investing.com/news/economic-indicators/china-cpi-inflation-falls-for-4th-straight-month-in-may-ppi-
weakest-in-2-yrs-4085942

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