RBI Monetary Policy LIVE Updates: Reserve Bank of India (RBI) Governor Shaktikanta Das said the MPC voted to maintain the repo rate at 4 percent and reverse repo rate at 3.35 percent. The accommodative policy stance will continue. The MPC maintained its Gross Domestic Product (GDP) growth forecast at 10.5 percent for FY22. The Monetary Policy Committee's policy announcement comes amid elevated inflation and surge in COVID-19 infections across the country.
Shaktikanta Das said, "rural demand remains buoyant and record agriculture production in 2020-21 bodes well for its resilience. Urban demand has gained traction and should get a fillip with the ongoing vaccination drive. The recent surge in COVID-19 infections, however, adds uncertainty to the domestic growth outlook amidst tightening of restrictions by some state governments."
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RBI Monetary Policy LIVE Updates | Anagha Deodhar – Chief Economist, ICICI Securities-
The MPC’s decision to pause and maintain an accommodative stance is along expected lines. However, it retained GDP growth projections for FY22 at 10.5% despite large stimulus in other countries and its potential impact on global growth. In this policy, the biggest announcement was GSAP 1.0 under which the RBI plans to buy government securities worth Rs 1trn in Q1FY22. Along with GSAP, the RBI also announced the extension of several liquidity facilities. Together, these measures are aimed at keeping financial conditions benign, ensure orderly evolution of the yield curve and supporting the nascent recovery.
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Ms. Bekxy Kuriakose, Head – Fixed Income, Principal Asset Management
All members of RBI MPC decided to keep key rates unchanged and stance as accommodative and pledged to continue to sustain growth on durable basis. Some concern has been expressed on input cost pressures which can feed into inflation particularly commodity prices and logistic risks. However overall RBI indicated that there are both downward and upward pressures on inflation reflecting their stance that they likely do not see inflation as a major concern. In this backdrop the continuation of the FIT (flexible Inflation targeting) Regime for next 5 yrs is also seen as a validation of its success since past five years and gives a good measure of policy continuity.
RBI Monetary Policy LIVE Updates | CARE Ratings:
"The monetary policy continues to be growth centric, despite the underlying upside risks to inflation. This is so as it believes that the inflation today is short-term in nature while growth has to protected for long term sustainability. Although the assurance of retaining the accommodative monetary policy stance to support growth reduces the likelihood of a rate hike at least in H1 FY22, it also rules out the likelihood a rate cut."
"The overall focus of the RBI is to make available adequate liquidity that it deems necessary for conduct of economic activity. Along with liquidity it is also striving to keep the cost of fund low by anchoring bond yields; and has indicated the scale of support to be extended towards this end. This is a positive as lower bond yields would facilitate higher borrowing by businesses."
RBI Monetary Policy LIVE Updates | RBI's Das cheers bond markets with liquidity bonanza, but what about savers?
Every single economist predicted status-quo in key policy rates on Wednesday. The markets too had factored in this possibility. But RBI GovernorShaktikantaDas had his plan readyto present a ‘dovish’ policy even without rate action.
The RBI policy announced onApril 7 offered the right liquidity guidance for financial marketsand assurance to lenders.To be fair, with inflation concerns remaining and growth scenario weak, the RBI could not have tinkered with the rates.Das and his team atMPC(monetary policy committee)had limited options before them in such a scenario.
RBI Monetary Policy LIVE Updates | RBI doubles payments bank balance limit to Rs 2 lakh
Small payments bank can now allow individual customers to keep a balance of up to 2 lakh.
"With a viewto furthering the financial inclusion and to expand the ability of payments bank to cater to the growing needs of their customers, the current limit on maximum end of day balance of Rs 1 lakh is being increased to Rs2 lakh per customer with immediate effect," RBI governorShaktikantaDas said.
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Aditi Nayar, Principal Economist, ICRA: "With the MPC forecasting the CPI inflationto average around 5.0% in FY2022, rate cuts seem to be ruled out, unless economic activity is severelydisrupted by the ongoing wave of Covid-19. At the same time, early rate hikes appear extremely unlikely, with inflation expected to remain below the 6% upper threshold of the MPC's newly renewed medium-term target range. Therefore, we maintain our view of an extended pause in the repo rate through 2021, with a low likelihood of an upward revision in the reverse repo rate over the next two quarters.
"By committing to continue the accommodative stance for as long as necessary to durably sustain growth , without providing any explicit timeframe, the MPC has clearly indicatedthat it will remain data dependent, going forward. While we anticipate that the MPC will take cues from the evolving scenario related to Covid-19 infections, mutations, and vaccinations, as well as their impact on localised restrictions, sentiment and growth, we expect it to remain suitably cautious, and continue the accommodative stance during H1 FY2022."
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Real estate experts said that with the country witnessing a second wave with partial lockdowns being imposed across different states and cities, the apex bank has sought to maintain the status quo rather than get 'adventurous'.
The extension of the Targeted Long Term Repo Operations scheme by six months is also expected to ensure adequate liquidity in the form of housing finance to real estate developers and provide stability in the Covid-19 era, the experts said.
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Rahul Bajoria, Chief India Economist at Barclays: "The RBI’s commitment to keep policy accommodative is a result of the tempering of upside risks to both growth and inflation. We think the effects of the resurgence of COVID-19 cases are likely to be limited and unlikely to derail the gradual normalisation of policy."
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Shaktikanta Das:At the moment growth is not undermined due to rising COVID-19 cases. So far, current surge in infections will not impact growth as much as it did last year. Guidance on growth seems appropriate. At this point, have made reasonable assumptions.
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Shaktikanta Das: Growth is of paramount importance at the current juncture. Mindful of the overall liquidity situation in the market.
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Shaktikanta Das: To exit accommodative stance, will have to wait for the situation to arise
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RBI Deputy Governor Michael Patra: GSAP will run alongside our normal liquidity operations.
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Shaktikanta Das: Addressing overall liquidity situation in market to ensure orderly evolution of yield curve.
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Shaktikanta Das: G-sec acquisition programme is in addition to normal instruments in our toolkit for liquidity management.RBI's signals, actions and communication must be read together.
RBI Monetary Policy LIVE Updates | The post-policy press conference has begun
RBI Monetary Policy LIVE Updates | The post-policy press conference will begin shortly.
RBI Monetary Policy LIVE Updates |
In its statement, the MPC said "The evolving CPI inflation trajectory is likely to be subjected to both upside and downside pressures. The bumper foodgrains production in 2020-21 should sustain softening of cereal prices going forward. While the prices of pulses, particularly tur and urad, remain elevated, the incoming rabi harvest arrivals in the markets and the overall increase in domestic production in 2020-21 should augment supply which, along with imports, should enable some softening of these prices going forward."
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Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research: "MPC’s decision to retain its accommodative policy and keep all its rates unchanged in the April 2021 statement is completely in line with the market expectations given the near term impact of the resurgence of the Covid pandemic in India on the nascent growth momentum. While RBI has kept its overall growth forecast for FY22 at 10.5 percent, it has slightly downsized its forecast for Q1FY22 in the context of regional lockdowns already announced by some state governments."
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Shaktikanta Das: "Juxtaposition of high frequency lead and coincident indicators reveals that economic activity is normalising in spite of the surge in infections. Rural demand remains buoyant and record agriculture production in 2020-21 bodes well for its resilience. Urban demand has gained traction and should get a fillip with the ongoing vaccination drive. The recent surge in COVID-19 infections, however, adds uncertainty to the domestic growth outlook amidst tightening of restrictions by some state governments."
RBI Monetary Policy LIVE Updates |
Here are some highlights of the MPC decision:
> Repo rate at 4 percent and reverse repo rate at 3.35 percent. The accommodative policy stance will continue.
> GDP growth outlook for FY22 is maintained at 10.5 percent. The MPC had projected this estimate during the previous policy announcement. Q1FY22 GDP growth outlook is 26.2 percent, and for Q2FY22 at 8.3 percent.
> The marginal standing facility (MSF) rate and the bank rate remain unchanged at 4.25 percent.
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RBI Governor Shaktikanta Das said that Consumer Price Index (CPI) inflation trajectory is likely to be subject to both upside and downside pressures. Food inflation will depend on progress of the south-west monsoon and taxes on petroleum products, the RBI governor noted.
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TLTRO scheme is being extended by 6 months, up to September 30, 2021. Shaktikanta Das said the RBI will support the market with adequate liquidity via its various tool kits.
Liquidity support of Rs 50,000 crore to be provided to NABARD, NHB and SIDBI.
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RBI Governor announced secondary market g-sec acquisition programme 1.0, to purchase Rs 25,000 crore of g-sec on April 15 under g-sec acquisition programme.To buy g-sec worth Rs 1 lakh crore under the g-sec acquisition programme in Q1FY22.
RBI's endeavour is to ensure orderly evolution of the yield curve, he said.
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RBI Governor: RBI is indirectly expanding liquidity. Completion of central and state government borrowing of Rs 22 lakh crore at record low rate.
RBI Monetary Policy LIVE Updates | Shaktikanta Das: See CPI inflation at 5 percent in Q4FY21 vs 5.2 percentforecast earlier. The MPC forecasts CPI inflation of 5.2 percent in Q1 and Q2 of FY22,4.4 percent in Q3 and5.1 percent in Q4.
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Shaktikanta Das:Global growth is gradually recovering from slowdown but remains uncertain. Vaccine distribution & its efficacy is key to global economic recovery.
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Real GDP growth outlook for FY22 is maintained at 10.5 percent. The MPC had projected this estimate during the previous policy announcement.
Q1FY22 GDP growth outlook is26.2 percent, and for Q2FY22 at 8.3 percent. The economy is forecast to grow at 5.4 percent and 6.2 percent in Q3 and Q4, respectively.
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Recent surge in COVID-19 cases must be closely watched, says RBI Governor. He said the "accommodative" policy stance will continueas long as necessary to mitigate the impact of the COVID-19 pandemic.
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RBI Governor Shaktikanta Das said the MPC voted unanimously to keep the policy rates unchanged. The “accommodative” policy stance will continue.
This means the repo rate is maintained at 4 percent and reverse repo rate at 3.35 percent.
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The headline inflation target for the Reserve Bank of India's Monetary Policy Committee has been kept unchanged at 4(+/-2) percent for the next five years,Economic Affairs Secretary Tarun Bajaj said on March 31.
While the official gazette notification is still awaited, this means that the MPC now has the mandate to take steps under monetary policy and inflation targeting frameworks to keep consumer price index-based inflation in the 2-6 percent range from 2021-22 till 2025-26.
Follow our LIVE blog for the market reaction to the monetary policy announcement.
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Check the
highlights of the previous MPC decision in February 2021.RBI Monetary Policy LIVE Updates |
In a research note, CARE Ratings mentioned its expectations from the monetary policy announcement:
> No change in the repo rate. The accommodative monetary policy stance would be maintained to address economic growth concerns.
> The RBI is likely to announce further liquidity infusion measures (TLTRO’s) to support credit growth during the course of the year if required.
> Open market operations would be announced periodically to anchor bond yields.
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The RBI will likely maintain its FY22 GDP growth estimate at 10.5 percent and watch the impact of the second wave on economic activity, according toSuvodeep Rakshit, senior economist atKotak Institutional Equities.Further, given the impact of food subsidy in FY2021-22, the gross value added growth needs to be more closely watched to gauge the "real" growth outturn.
Localised lockdowns are unlikely to dent the growth prospects significantly but risks remain skewed towards the downside. Compared to the RBI projections in February, headline retail inflation will be slightly lower but well above its comfort zone of 4 percent.
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The MPC's policy decision comes after a three-day meeting that began on April 5.RBI Governor Shaktikanta Das will make the monetary policy announcementat 10 am. A post-policy press conference will be held at 12 pm.
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It is widely expected that the Monetary Policy Committee (MPC) will maintain status quo and keep the key interest rates steady. Currently, the repo rate is 4 percent and reverse repo rate is 3.35 percent.
The policy announcement comes amid elevated inflation and surge in COVID-19 infections across the country.
On February 5, 2021the MPC had kept lending rates unchanged, and maintained its “accommodative” policy stance.
The MPC has cut the repo rateby 250 bps since February 2019.
Good morning.Welcome to Moneycontrol’s LIVE coverage of the Reserve Bank of India’s monetary policy announcement. The MPC will release its statement on key interest rates.
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