RBI Policy LIVE: MPC holds rates, revises GVA growth forecast down to 6.7%

"Markets moved higher for fourth successive session and gained nearly half a percent, tracking firm global markets and supportive local cues. Initially, encouraging core sector data and upbeat Asian markets triggered firm start. However, the pace of rise was gradual thereafter, indicating caution ahead of the monetary policy review meeting outcome. On the expected lines, MPC kept the policy rate unchanged and thus failed to attract any major reaction.

Nifty has reached closer to its resistance zone i.e. around 9950 and surpassing that hurdle won't be easy.  We suggest keeping close watch on global developments and currency movement in absence of major trigger. Also, maintain stock specific trading approach and focus more on money management."

16:23 Statement by George Alexander Muthoot, Managing Director, Muthoot Finance on RBI's monetary policy statement.

"Though the inflationary pressures had subsided in the near term, from a medium term objective, the inflationary risks are still on the upside, so keeping the rates unchanged is a more cautious decision by the RBI. The policy also enables to settle down with the after effects of demonetisation and GST which are very important parameters to keep a tap on.

Thus, the policy clearly focuses on managing inflation and reviving the economy.”

16:20 Statement by Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani on RBI's monetary policy statement.

Considering the current economic situation, it is disappointing that the RBI has chosen to maintain status quo on policy rates. The downside risks to growth has increased significantly over the last few quarters which coupled with sluggish credit off take has dampened activity across all the sectors.

The policy is in line with the Central Bank's stance of achieving the medium term inflation target, but if continuous price pressures are going to limit the room for further rate cuts then the government will have to boost spending that may impact its budget deficit target.

A rate cut now would not only have provided much needed cushion to the economy, but would have also added thrust to the government initiatives on affordable housing. The real estate industry is already under immense pressure owing to rise in input costs which have put severe strain on profitability.

From a consumers perspective, the home loan rates are at their lowest and are unlikely to go down from here immediately. So, they must utilize this opportunity and book their homes ahead of the festive season to cash in on deals offered by developers.

16:17 Statement by VS Parthasarathy, Group CFO and Group CIO, Mahindra & Mahindra on RBI's monetary policy statement.

Good policy is a process and not a state of being.

At times, both the direction and destination are important. By maintaining status quo with a 5:1 verdict the MPC has clearly reiterated its wait and watch approach. There are too many moving pieces and it is important from their perspective to exercise caution before proceeding.

For India, a higher trajectory of Growth is a must. For this, we need smart and positive cues and from that perspective, this is an opportunity missed. We welcome the ‘pause’ but the positive cue should come sooner rather than later.

India has a historic chance to take its growth trajectory higher. The single biggest goal for India is to attain a higher growth rate and on that path, positive cues are very important.

15:29 Government bonds got sold after RBI's monetary policy statement. The 10-year benchmark yield was trading at 6.69 percent, 4 basis points higher than the previous close. Bond prices and yields move in opposite directions.

15:28 The rupee, which was trading 0.2 percent higher against the dollar before RBI's policy statement, has now gained further and is trading 0.5 percent higher against the greenback at 65.17.

15:26 Governor Urjit Patel said that the RBI would have to carefully observe how inflation evolves over the next 6-7 months.

15:24 RBI deputy governor NS Vishwanathan said the RBI is working to enable non-scheduled co-operative banks to open accounts with RBI.

15:22 The governor also said that some factors that impacted growth in the second quarter will dissipate going ahead.

15:21 Governor Urjit Patel said that adequate food stock and supply management can keep food price pressures at bay.

15:18 To know why the MPC decided to keep rates unchanged despite being under a lot of pressure to do so, read this story.

15:15 To know how the market received RBI's policy statement, read this story.

15:13 Governor Urjit Patel said that the services sector is showing a healthy growth rate and that a cyclical upturn in growth in the sector could be seen in next 2 quarters.

15:11 RBI deputy governor BP Kanungo says RBI is targetting active consolidation of state debt through buybacks and switches.

15:09 RBI has said that held-to-maturity Limit will be cut to 20 percent by December 31 and 19.5 percent by March 31.

15:05 Governor Urjit Patel says core industries performed well in August.

15:01 RBI deputy governor Viral Acharya has said that the corporate credit risk profile has shown signs of improvement.

14:58 Governor Urjit Patel has said recapitalising PSU banks is necessary to ensure that growth impulse is not restrained.

14:53 RBI has said that CPI inflation may expand by 25 basis points if fiscal deficit gets overshot by 50 bps.

14:52 Watch the RBI's monetary policy statement LIVE here

14:51 Urjit Patel says that implementation of GST has rendered short-term prospects uncertain.

14:50 Governor Urjit Patel says teething problems with GST might get resolved soon.

14:46 CPI for October-December 2018 is seen at 4.9 percent, RBI said.

14:43 RBI has said that CPI (consumer price index) for the January-March and April-June quarters of 2018 is seen at 4.6 percent.

14:42 The central bank's stance on liquidity has been kept unchanged at 'neutral'.

14:38 RBI said that farm loan waivers by states may result in fresh slippages.

14:37 Statutory liquidity ratio (SLR) has been cut by 50 basis points to 19.5 percent, effective fortnight starting October 14.

14:35 MPC member Ravindra Dholakia sought a 25 basis points cut in repo rate.

14:33 RBI has said that the GVA growth forecast for FY18 has been revised to 6.7 percent from 7.3 percent earlier. Bank rate and marginal standing facility have been kept unchanged at 6.25 percent.

14:30 The MPC has kept the key repo rate unchanged at 6.00 percent and reverse repo rate unchanged at 5.75 percent.

14:27 A CNBC TV18 poll has revealed that 40 percent of bankers expect the RBI to cut the repo rate by 25 basis points today.

14:23 Pressure has been mounting on the RBI to cut rates this time around as macro-economic indicators are getting grimmer by the day. But the RBI might still stay pat. Read the full story here.

14:12 Bankers have said that although they expect the RBI to keep rates unchanged, they expect a slightly dovish tone from the central bank.

At 14:10, the 10-year benchmark bond yield was trading 2 basis points lower than its previous close at 6.62 percent, while the rupee was trading 0.2 percent against the dollar at 65.34.

14:03 Banking stocks were trading largely flat ahead of the monetary policy announcement. State Bank of India was trading 0.4 percent higher while ICICI Bank was trading 0.5 percent lower. Axis Bank and HDFC Bank were trading marginally in the red.

Auto, real estate and housing finance stocks were all trading in the green ahead of the announcement. Read the full story here.

13:55 Market participants will watch out for forecast on inflation and GDP growth in RBI's monetary policy statement. Commentary on the government's finances and the voting pattern of the Monetary Policy Committee members are some of the other things that will be keenly eyed.

13:44 Watch this video to understand how interest rates work

13:40 The Confederation of Indian Industry (CII) recently called for a 100 basis points cut in interest rates, saying it was the only way to boost the economy.

Several other bodies and the government have also made calls for a rate cut to help India out of the slowdown it is currently experiencing.

13:20 Given the prevalent concerns about a slowdown in the economy, economists expect the RBI to exercise caution and keep rates unchanged.

India's GDP growth slowed down to a three-year low of 5.7 percent at the end of the June quarter and consumer inflation hit a 5-month high of 3.36 percent in August.

The RBI has a target of keeping consumer inflation at around 4 percent and given the recent rise in crude prices, which are currently near a 2-year high, the central bank might want to keep a hold on inflation for the time being.

13:00 The Reserve Bank of India's Monetary Policy Committee is scheduled to announce its fourth bi-monthly policy of the year at 14:30 IST.

Bankers and economists expect the central bank to keep rates unchanged but market participants and the government are both hoping for a 25 basis points rate cut.