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June 08, 2022 / 01:03 PM IST

RBI Monetary Policy LIVE Updates | Future action will depend on evolving inflation-growth dynamics: Guv Das

RBI MPC LIVE Updates | MPC voted unanimously to raise repo rate by 50 basis points to 4.90 percent. The MPC also voted unanimously to remain focused on withdrawal of accommodation to ensure inflation remains within target going forward, RBI Governor Shaktikanta Das announced on June 8

RBI Monetary Policy Committee LIVE Updates | The Reserve Bank of India (RBI) has raised the repo rate by 50 basis points, an increase for the second time in five weeks at the conclusion of the monetary policy committee's three-day meeting on June 8. The move was not a surprise as multiple polls, including a poll of 15 economists by Moneycontrol said they expected a 40 bps rise.

Earlier, the monetary policy committee (MPC) had held an unscheduled meeting in early May and

voted unanimously for a 40 basis point repo rate hike in anticipation of a huge increase in April inflation. The repo is the rate at which the RBI lends short-term funds to banks.

The RBI's most recent forecast, released in April, had said headline retail inflation would average 6.3 percent in April-June, 5.8 percent in July-September, 5.4 percent in October-December, and 5.1 percent in January-March 2023.

Here are top 10 highlights from RBI Governor Shaktikanta Das' speech:

- The Standing Deposit Facility and Marginal Standing Facility rates raised by 50 basis points. The Standing Deposit Facility rate is now 4.65 percent, and the Marginal Standing Facility rate now 5.15 percent.

- MPC voted unanimously to remain focused on the withdrawal of accommodation to ensure inflation remains within target going forward.

- GDP growth forecast for FY23 retained at 7.2 percent. GDP growth forecast at 16.2 percent for April-June. GDP growth forecast at 6.2 percent for July-September. GDP growth forecast at 4.1 percent for October-December. GDP growth forecast at 4.0 percent for January-March 2023.

- RBI Governor Shaktikanta Das: CPI inflation forecast for FY23 raised to 6.7 percent from 5.7 percent. RBI Inflation forecast assumes normal monsoon and crude basket price at $105/barrel

- While normalising pandemic-related measures, RBI will ensure adequate liquidity in the banking system

- RBI monitoring government securities market very closely. We will take necessary steps as and when required.

- As on June 3, India's foreign exchange reserves stood at $601.1 billion.

- Limits on individual home loans given by urban and rural co-operative banks are being revised upwards more than 100 percent taking into account the rise in housing prices over the last decade.

- The limit on recurring e-payments is now raised to Rs 15,000 from Rs 5,000 to further facilitate transactions such as subscriptions.

- Credit cards, starting with RuPay credit cards, can now be linked to UPI.
  • June 08, 2022 / 12:58 PM IST

    RBI MPC LIVE Updates: India faces growth, inflation challenges but medium-term fundamentals solid, chief economic advisor says
    India’s faces immediate challenges on the growth, inflation and fiscal fronts but its medium-term fundamentals remain solid, chief economic advisor V Anantha Nageswaran said on June 8. “We are right now in a situation where there is considerable amount of challenges that we face for the Indian economy both from the global macro monetary policy and political developments,” Nageswaran said at an event, in his first comments after the Reserve Bank of India raised its policy rate by 50 basis points. “This year, we will be facing the challenges of managing a sustainably high growth rate, moderate inflation, keeping the fiscal deficit under balance and also ensuring that the external value of the Indian rupee remains stable.” Read full here

  • ADVERTISEMENT
  • June 08, 2022 / 12:46 PM IST

    RBI MPC LIVE Updates: UPI linking, cryptos, digital apps 
    >> RBI Deputy Governor T Rabi Sankar

    Allowing the linking of credit cards to UPI is all about giving a wider choice of payments to customers. We will introduce the arrangement and see how the pricing goes.
    >> Governor Shaktikanta Das
    On crypto: There is constant engagement between the government and the RBI on all issue related to cryptocurrency. Let’s wait for the government’s discussion paper.
    On unregistered apps: Majority of digital lending apps are unregistered with the RBI. There, the law enforcement agencies will and are taking action. When we get complaints about these unregistered apps, we advise people to file a complaint with the police. Customers should ensure the digital lending app they are using is registered with the RBI.

  • June 08, 2022 / 12:27 PM IST

    RBI MPC LIVE Updates: RBI Governor Shaktikanta Das: Inflation target of 4 percent remains.
    We will ensure availability of adequate liquidity. If the liquidity runs into deficit, the repo window is always available. That can be used by the (banking) system. In volatile situations, we just cannot give forward guidance.

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  • June 08, 2022 / 12:23 PM IST

    RBI MPC LIVE Updates: Rahul Bajoria, Chief India Economist, Barclays
    “Based on today’s moves, if the inflation outlook does not improve and downside growth risks do not rise materially, we think the RBI will continue on its rate hiking trajectory, taking the policy rate to 5.25 percent by delivering a 35 bps hike in the next meeting in August. The bank also indicated that inflationary pressures have become more entrenched, which has taken place much faster than it was expecting.
    Over the next three meetings (August, October, and December), we expect the RBI to make inflation management its key priority, which could include steps to curb aggregate demand. In terms of sequencing, we now expect the RBI to deliver a 35 bps rate hike in August, and then raise the policy rate by 25 bps to 5.50 percent in October, while also switching to a neutral stance. Beyond that, we expect RBI to deliver one more rate hike in December to 5.75 percent, which we now believe will mark the end of this cycle. This will allow the RBI to lean its policy stance towards tightening, while maintaining a neutral stance by the end of the calendar year.”

  • June 08, 2022 / 12:19 PM IST

    RBI MPC LIVE Updates: Abheek Barua, Chief Economist, HDFC Bank
    “Today’s monetary policy announcement was aggressive and moves beyond just ‘frontloading’ of interest rates increases. The central bank seemed far more concerned about inflation - reflected in its upward revision in its inflation forecast by 100 bps to 6.7 percent - and relatively more sanguine on domestic growth impulses.
    Clearly the RBI is concerned about the broad-based nature of the increase in inflation and the risk of the second-round impact on inflation expectations. Therefore, the policy rate is likely to be raised well beyond the pre-pandemic level, close to 6 percent, by fiscal year-end.”

  • June 08, 2022 / 12:16 PM IST

    RBI MPC LIVE Updates: RBI Deputy Governor T Rabi Sankar
    CBDC will be introduced this year. The process of introduction will be gradual so that there is no disruption in the financial system.

  • June 08, 2022 / 12:12 PM IST

    RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
    RBI Governor Shaktikanta Das: 75 bps of the 100 bps increase in the revised inflation forecast of 6.7 percent for FY23 is attributable to food inflation. This food inflation spike is related to the external situation. Inflation must come down. Economic recovery must also continue. We remain accommodative. But we are completely focused on withdrawal of accommodation. But in terms of rates, we are still below pre-pandemic levels. In terms of liquidity, it is higher than pre-pandemic levels. So in that sense stance is still accommodative, but we are focused on withdrawal of accommodation.

  • June 08, 2022 / 12:05 PM IST

    RBI MPC LIVE Updates: Madhavi Arora, Lead Economist, Emkay Global Financial Services
    “The 50-basis-point rate hike in policy repo rate is in line with our expectations of RBI remaining front-loaded on rate hikes, after un-anchoring markets’ policy expectation in April-May.
    The triple whammy of commodity-price shocks, supply-chain shocks and resilient growth, has shifted the reaction function in favor of inflation containment. The reaction function is now evolving with fluid macro realities. The inflation prints of next two quarters are likely to exceed 7 percent, which could pressure the RBI into acting sooner rather than later.
    FY23 could thus further see rates going up by more than 75 basis points, with the RBI now showing its intent to keep real rates neutral or above to quickly reach pre-COVID levels.”

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  • June 08, 2022 / 12:02 PM IST

    RBI MPC LIVE Updates: Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research
    “RBI’s policy action has been broadly in line with our expectation although the tone is slightly more hawkish. The front loaded repo rate hike is in progress with MPC increasing the benchmark rates by 50 basis points and taking the cumulative figure to 90 basis points in the current cycle. We believe that more rate hikes are likely in the next 2-3 policy meetings given that RBI has revised its headline inflation forecast sharply upwards to 6.7 percent from the earlier 5.7 percent. Clearly, this would urge RBI to focus on the complete ‘withdrawal of accommodation’ since CPI will remain significantly higher than the 6 percent upper band of MPC. However, the extent of the subsequent hikes will depend on the inflation print over the next few months, the performance of the monsoon and its impact on the food prices as also on the effectiveness of the price control measures taken by the government. At this point, we expect repo rate to touch at least 5.5 percent by the end of the fiscal FY23 or a cumulative rate hike of 150 basis points.
    RBI’s rate hike implies further and higher rate increases in consumer loans as well as deposit rates. By end FY23, we expect retail home loan and deposit rates across all categories to rise by at least 100 basis points from the current levels.”

  • June 08, 2022 / 12:02 PM IST

    RBI MPC LIVE: Watch the Governor Shaktikanta Das' interaction with media post announcement here

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