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 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
June 08, 2022 / 12:56 IST
RBI MPC LIVE Updates: Borrowers to see a steep hike in EMIs, interest burdens
For depositors, this signals a further increase in their deposit rates, but high inflation means that real returns will remain muted... Read More
June 08, 2022 / 12:46 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 / 12:34 IST
RBI's repo rate hike effect: Private banks offering as high as 6.25% on one-year fixed deposits
Several private banks have hiked interest rates on fixed deposits for one year tenure after the Reserve Bank of India raised the repo rate by 40 basis points this month... Read More
June 08, 2022 / 12:27 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.
June 08, 2022 / 12:23 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 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 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 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 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.”
June 08, 2022 / 12:02 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 / 11:51 IST
RBI MPC LIVE Updates: RBI Monetary Policy | MPC failure predicted as FY23 inflation forecast raised to 6.7%
RBI policy: While the central bank's inflation forecast for FY23 is 220 basis points higher than what it projected in February, it does not take into account the impact of the 50 bps repo rate hike…... Read More
June 08, 2022 / 11:47 IST
RBI policy: Market movements post RBI MPC
>> Indices trade in a range, Nifty around 16,450; Barring FMCG, all sectors in green.
>> Indices trade positive, Sensex trading higher by more than 100 points, Nifty around 16,450.
>> The Sensex was trading higher by 135.6 points or 0.25% at 55,242.94 and the Nifty was up 42.95 points or 0.26% at 16,459.3. About 1816 shares have advanced, 1208 shares declined, and 117 shares are unchanged.
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June 08, 2022 / 11:45 IST
RBI MPC LIVE Updates: India chief economic adviser V Anantha Nageswaran
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.
June 08, 2022 / 11:44 IST
RBI MPC LIVE Updates: Sujan Hajra, Chief Economist, Anand Rathi Shares & Stock Brokers
The 50-basis-point rate hike by the RBI today is higher than our expectations of 40-basis-point rate hike. The measures today are consistent with sharply upwardly revised inflation and unchanged growth projections for the current financial year by the Reserve Bank. Also, continued high inflation, aggressive rate hike plans of the US Federal Reserve, strengthening of US dollar, and portfolio capital outflow from emerging market economies including India are factors which influenced the decision of the RBI. The central bank clearly is front loading the monetary policy tightening to normalise the rate to the pre-pandemic level quickly. Thereafter, the Reserve Bank is likely to scale down the extent of rate hikes to instalments of 25 basis points each. At the peak, we expect the RBI to take the repo rate to the 6-6.5 percent range during the ongoing rate hike cycle. While the major part of rate hike by the RBI are already factored in by most parts of the financial market, in the near term, the higher than expected rate hike can have some negative influence in the equity and bond market.
June 08, 2022 / 11:18 IST
RBI MPC LIVE Updates: Real estate stocks surge on RBI measures to improve credit to sector
Shares of real estate companies jumped sharply on June 8 after the Reserve Bank of India announced several measures to improve credit flow to the sector and boost demand. The measures sparked rally in shares of DLF, Macrotech Developers, Oberoi Realty, Sobha, Brigade Enterprises, and Godrej Properties, which rose 2-3 percent. At 10:48am, the Nifty Realty index was up 2.4 percent at 405.8 on the National Stock Exchange. Read details here
June 08, 2022 / 11:12 IST
RBI Monetary Policy | Limit for recurring payment e-mandates raised to Rs 15,000
RBI policy: Governor Shaktikanta Das has said the move will further facilitate recurring payments like subscriptions, insurance premiums and education fees of larger value... Read More
June 08, 2022 / 11:09 IST
RBI MPC LIVE Updates: Garima Kapoor, Economist, Elara Capital
“With inflation expected to remain above RBI’s mandate through FY23, we expect MPC to hike policy repo rate by an additional 40 basis points this fiscal year and target a terminal repo rate of 6.25 percent in the current hike cycle. Gradual tightening of domestic liquidity conditions, elevated crude oil prices, tightening of global financial conditions and risks of overshooting of FY23 fiscal deficit is likely to put incremental pressure on the domestic bond yields. We expect 10-year bond yield to gradually move towards 8 percent over next 4 to 6 months.”
June 08, 2022 / 11:05 IST
RBI MPC LIVE Updates: Aditi Nayar, Chief Economist, ICRA
“While further rate hikes remain clearly on the table, with the reference to the revised repo rate of 4.9 percent remaining below the pre-pandemic level, the comment on the orderly completion of the government borrowing programme has served to cool the 10-year government-securities yield. We foresee further repo hikes of 35 basis points and 25 basis points, respectively, in the next two policies. However, the upmarch in the yields will now be somewhat shallower than our earlier expectations."
June 08, 2022 / 11:04 IST
RBI MPC LIVE Updates: RBI raises repo rate by 50bps to 4.9% to fight inflation pressure
The Reserve Bank of India's monetary policy committee (MPC) hiked the repo rate, the key policy rate at which the central bank lends short-term funds to banks, by another 50 basis points on June 8, continuing the fight against high inflation. With this 50-bps change, the repo rate stands at 4.9 percent.
The MPC has predicted the inflation at 6.7 percent. Data released on May 12 showed retail inflation jumped to a near-eight-year high of 7.79 percent in April from 6.95 percent in March. Not only is the latest Consumer Price Index (CPI) inflation print well above the upper bound of the RBI's 2-6 percent tolerance band, it is the 31st consecutive month in which it had come in above the medium-term target of 4 percent.
The latest inflation print confirms the Monetary Policy Committee’s assessment that persistently high inflation is the biggest worry for policymakers at the moment. The MPC has a mandate to contain inflation within the 2-6 percent band and a breach for three consecutive quarters will require the panel to explain to Parliament why it failed to keep inflation within the band. Read more here
June 08, 2022 / 10:55 IST
RBI MPC LIVE | Credit cards can now be linked to your UPI, starting with RuPay
In a major shift in how the Unified Payments Interface (UPI) functions, the Reserve Bank of India (RBI) today said that credit cards too will be allowed to be linked to the UPI accounts. The implementation will begin with the indigenous RuPay credit cards being allowed to be linked, followed by other card networks such as Visa and Mastercard.
Until now, customers could only link their debit cards to UPI. The announcement was made by RBI Governor Shaktikanta Das in his monetary policy speech. Read more here
June 08, 2022 / 10:45 IST
MPC meeting: Key highlights from RBI Governor Shaktikanta Das' speech
The RBI policy committee held an unscheduled meeting in early May and voted unanimously for a 40 basis point repo rate hike... Read More
June 08, 2022 / 10:36 IST
RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
Given the elevated uncertainty, we have remained dynamic and pragmatic rather than be bound by stereotypes and conventions. Experience teaches us that preserving price stability is the best guarantee to ensuring lasting growth and prosperity. Our actions today will impart further credibility to our medium term inflation target.
June 08, 2022 / 10:32 IST
RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
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 / 10:29 IST
RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
>> 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.
>> Urban co-operative banks can now extend doorstep banking services to their customers
>> RBI Governor Shaktikanta Das: Rural co-operative banks can now extend finance to commercial real estate, or loans for residential housing projects
June 08, 2022 / 10:24 IST
RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
While normalising pandemic-related measures, RBI will ensure adequate liquidity in the banking system. We are monitoring the government securities (g-sec) market very closely and necessary steps will be taken as and when required. I have not mentioned any particular steps RBI might take, but we will ensure orderly completion of government’s borrowing programme. Strength of banking system will help economic recovery.As on June 3, our foreign exchange reserves stood at $601.1 billion.
June 08, 2022 / 10:22 IST
RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
RBI Inflation forecast assumes normal monsoon and crude basket price at $105/barrel ... The monetary policy accomodation withdrawal will be calibrated keeping in mind requirements of economy. Baseline inflation forecast assumes a price of $105 per barrel for the Indian crude oil basket. It also does not take into account MPC’s actions today.
June 08, 2022 / 10:22 IST
RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
CPI inflation forecast for FY23 raised to 6.7 percent from 5.7 percent
>> For April-June revised to 7.5 percent from 6.3 percent
>> For July-September revised to 7.4 percent from 5.8 percent
>> For October-December revised to 6.2 percent from 5.4 percent
>> For January-March 2023 revised to 5.8 percent from 5.1 percent
June 08, 2022 / 10:21 IST
RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
Survey of urban households following recent fuel excise duty cut showed “significant moderation” in inflation expectations. Urban households’ three-month-ahead inflation expectations declined by 190 basis points, while one-year-ahead inflation expectations declined by 90 basis points.
June 08, 2022 / 10:19 IST
RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
FY23 GDP growth seen evolving broadly along April forecast. GDP growth forecast for FY23 retained at 7.2 percent; with
>> Q1 (April-June) GDP growth forecast at 16.2 percent
>> Q2 (July-September) GDP growth forecast at 6.2 percent
>> Q3 (October-December) GDP growth forecast at 4.1 percent
>> Q4 (January-March '23) GDP growth forecast at 4.0 percent
June 08, 2022 / 10:14 IST
RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
Information for April-May suggests domestic economic recovery is firm.Urban demand is recovering, rural demand is also improving and while urban demand is recovering, rural demand is gradually improving. Surveys show capacity utilisation in manufacturing sector increased to 74.5 percent in January-March.
June 08, 2022 / 10:11 IST
RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
The ongoing war turning out to be a dampener on global trade and growth. Domestic economic activity is gaining traction while inflation pressures have intensified faster. Inflationary pressures have become broad based and remain largely driven by supply shocks. Repo rate remains below its pre-pandemic level. Inflation is likely to remain near upper tolerance of 6% for first three quarters of this year. Sustained high inflation could unhinge inflation expectations.
June 08, 2022 / 10:10 IST
RBI MPC LIVE Updates: RBI Governor Shaktikanta Das
>> MPC voted unanimously to raise repo rate by 50 basis points to 4.90 percent.
>> Standing Deposit Facility and Marginal Standing Facility rates also raised by 50 basis points. Standing Deposit Facility rate now 4.65 percent, and Marginal Standing Facility rate now 5.15 percent.
>> MPC voted unanimously to remain focused on withdrawal of accommodation to ensure inflation remains within target going forward
June 08, 2022 / 10:05 IST
RBI MPC LIVE Updates:
Governor Shaktikanta Das on June 8 announced that the central bank has raised key rates by by 50 bps to 4.90%. MPC vote was unanimous and has decided to keep stance withdrawal from accomodative.
June 08, 2022 / 10:03 IST
RBI MPC LIVE Updates:
We are facing new challenges with every passing day due to the war. War in Europe is lingering, challenges accentuating supply chains. Recovery is gaining momentun despite the pandemic and war. On the other hand inflation has become global, RBI Governor Shaktikanta Das
June 08, 2022 / 10:00 IST
RBI MPC LIVE Updates: Repo rate hike definitely on cards but future guidance more important, says Dhiraj Relli of HDFC Securities
RBI is likely to follow a nuanced and calibrated approach to rate hikes once its pre-Covid neutral accommodation of 5.15 percent is reached. We expect 40bps rate hike in the upcoming policy meet and…... Read More
June 08, 2022 / 09:57 IST
RBI MPC LIVE Updates: Watch out for - Market View
Bond traders will look for clarity from Das on specific steps the central bank plans to undertake to keep the government’s borrowing costs down. The 10-year bond yields touched 7.5% on Monday, for the first time since 2019, as the MPC started its three-day meet.
The market is also worried about extra borrowing after the government’s fiscal package, but the current inflationary and liquidity backdrop may not allow the RBI to conduct any immediate secondary market bond purchases, said Citibank’s analysts including Samiran Chakraborty, who said the 10-year bond yields may approach 8%.
“The bond market is already positioned for front-loaded rate hikes,” said Pankaj Pathak, fixed-income fund manager at Quantum Asset Management Co. Any smaller rate hike than the expected 40-50 basis points will be a “positive surprise,” leading to marginal softening of short-term bond yields.
June 08, 2022 / 09:57 IST
RBI MPC LIVE Updates: Watch out for - Terminal Rate
The forecasts would also act as an indication of how much rates can rise in the current cycle, with some analysts seeing borrowing costs rising above pre-pandemic levels.
Governor Das’s reluctance in a recent interview to commit to the pre-pandemic rate of 5.15% may be an indication of the MPC’s resolve to raise the main repurchase rate beyond that over the next few meetings, said Ananth Narayan, senior India analyst at Observatory Group.
June 08, 2022 / 09:56 IST
RBI MPC LIVE Updates: Watch out for - Forecast Revision
Analysts will be keenly watching for the central bank’s take on the inflation trajectory, especially after Prime Minister Narendra Modi’s government announced fiscal steps in tandem with monetary efforts to tame prices.
Economists at Barclays Plc and Citigroup Inc. see the RBI raising its average inflation forecast for the year ending March to above 6% from 5.7% seen previously.
The government’s $26 billion fiscal package aimed at easing price pressures by lowering some levies on retail fuels to imports may not provide any immediate reprieve to the inflation-targeting RBI, said Rahul Bajoria, an economist at Barclays.
While inflation worries may keep the RBI focused on prices, near term growth impulses remain largely stable, according to Nomura Holdings Inc. economists Sonal Varma and Aurodeep Nandi. They do not expect a “material downgrade” of growth forecasts in the policy.
June 08, 2022 / 09:55 IST
RBI MPC LIVE Updates: RBI’s rate hike is just a matter of how much: decision guide
The six-member Monetary Policy Committee will probably raise the benchmark interest rate by 40 basis points to 4.8% on Wednesday, according to the median in a Bloomberg survey of 37 economists.... Read More
June 08, 2022 / 09:54 IST
RBI MPC LIVE Updates: Rahul Bajoria, Barclays' chief India economist.
"We think RBI may revise its inflation forecasts higher to 6.2-6.5 percent, with an emphasis on the risk of elevated near-term prints. However, we do expect the RBI to continue to predict a gradual decline in inflation over its forecast horizon," said Rahul Bajoria, Barclays' chief India economist.
June 08, 2022 / 09:52 IST
RBI MPC LIVE Updates: Kaushik Das, Deutsche Bank's chief India economist
Deutsche Bank expects a rate hike of at least 50 basis points, though it hasn't ruled out the possibility of a 60-basis-point hike. "Given the elevated inflation trajectory, the RBI will have to frontload rate hikes, just like the US Federal Reserve, and a decisive action at this juncture will go a long way, in our view, toward containing inflation and inflation expectations over the medium term," Kaushik Das, Deutsche Bank's chief India economist, said.
June 08, 2022 / 09:47 IST
RBI MPC LIVE Updates:
The Reserve Bank of India (RBI) is likely to raise the repo rate by 40 basis points for the second time in five weeks at the conclusion of the monetary policy committee's three-day meeting on June 8, according to a Moneycontrol poll of 15 economists. While the median of economists' predictions points to a 40-basis-point rate hike on June 8 to 4.80 percent, they were far from unanimous in their expectation of the quantum of rate hike the MPC is likely to announce, with estimates ranging from 25 basis points to at least 50 basis points. One basis point is a hundredth of a percentage point.
June 08, 2022 / 09:46 IST
RBI MPC LIVE Updates: BofA Global Research
In this backdrop of inflation persisting beyond 6 percent and growth chugging along, we expect the RBI MPC to hike policy repo rate by 40 bps in June and 35 bps in August. We must highlight that for the sake of standardised steps, the chances of delivering a 50 bps + 25 bps hike combination is quite high too. We see the RBI continuing with measures to absorb liquidity," BofA Global Research said in a note on June 3, predicting a 50-basis-point increase in the cash reserve ratio (CRR) for banks, which would absorb around 870 billion rupees in the banking system.
June 08, 2022 / 09:45 IST
RBI MPC LIVE Updates: Radhika Rao, senior economist at DBS Bank
A hike at this week's RBI ... policy meeting is a foregone conclusion. Inflation has proved to be persistently high in the past three years, even as drivers have changed - from supply bottlenecks to commodities and reopening pressures. Further CRR increases are on the cards to lower the liquidity surplus and aid transmission
June 08, 2022 / 09:44 IST
RBI MPC LIVE Updates: Rate hikes between 25-75 bps?
Economists polled by Reuters expect a rise of 25 to 75 basis points. It will follow a 40-basis-point rise in May that kicked off the central bank's tightening cycle, which economists expect to be relatively short. Analysts also expect the RBI to reduce liquidity, reinforcing its fight against inflation and extending its effort to return monetary conditions to what they were like before the pandemic prompted radical action to stimulate the economy.
June 08, 2022 / 09:38 IST
RBI MPC LIVE Updates: Key aspects that are likely to be considered in the policy meeting - GIlt yields (5/5)
No limit rise in gilt yields: Economists pointed out that the RBI will not announce any step to limit the rise in gilt yields. “The RBI governor will likely use verbal assurances that the deficit will not be breached to limit the rise in gilt yields,” added Srinivasan.
June 08, 2022 / 09:34 IST
Key aspect: RBI MPC LIVE Updates: Key aspects that are likely to be considered in the policy meeting - Growth (4/5)
Sacrificing growth for now: Growth won’t be the priority for the monetary policy for now, said economists. “Both RBI and the government are now prioritising inflation control and seem willing to sacrifice some growth, for example, in base metals and wheat exports, to achieve modest inflation,” said Prithviraj Srinivas, Chief Economist at Axis Capital. “On the growth front, the RBI is likely to keep the GDP forecast unchanged at 7.2 percent,” added Arora.
June 08, 2022 / 09:27 IST
RBI MPC LIVE Updates: Key aspects that are likely to be considered in the policy meeting - CRR (3/5)
Slight rise in CRR: Although, it might not be a major agenda for this meet, but there is likely to be a slight rise in the cash reserve ratio (CRR) in the monetary policy, according to economists. “A gradual increase of CRR by 25 bps in the next policy meet can’t be ruled out, depending on the situation, going forward. The liquidity adjustment facility (LAF) corridor has been normalised. So, we don’t expect much change in this context,” stated Sankhanath Bandyopadhyay, Economist, Infomerics Ratings.
June 08, 2022 / 09:25 IST
BI MPC LIVE Updates: Key aspects that are likely to be considered in the policy meeting - Inflation (2/5)
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Revised inflation target: The Inflationary Expectations Survey by the RBI reveals that 89.9 percent respondents in March 2022 believed that prices will increase, going forward, higher than the January 2022 estimate (85.6 percent). With CPI and WPI, both setting new highs last month, it is expected that the RBI will revise its inflation target to a more realistic number, i.e, beyond 6 percent for CPI as the ongoing Ukraine-Russia war impacts input costs, according to economists.
