20.06 pm: Here's what fund managers had to say about the monetary policy.
19.45 pm: Despite the monetary easing the question still remains whether it will be passed on to the end consumer or not?
19.24 pm: Find out why RBI bit the bullet and cut rate.
19.00 pm: Real estate and banking experts anticipate the home loan interest rate to hover around 8 percent once the banks decide to pass on the benefit to consumers.
18.38 pm: A rate cut just ahead of the festive season augurs well for the rate sensitive sectors such as banks, NBFCs, automobiles and capital goods. Read more
18.11 pm: READ: RBI comfortable with repo rate vs CPI target rate: Deputy Governor Viral Acharya
16.19 pm: Nifty Bank ends at 25.055.20, down 67 points from previous close. Benchmark indices Sensex and Nifty end marginally down. Market participants said that the lacklustre response from the stock market was because a 25 bps rate cut was already factored in.
15.51 pm: KVS Manian of Kotak Mahindra Bank: Any rate cut from here on has to be data driven, particularly inflation data driven.
15.49 pm: KVS Manian of Kotak Mahindra Bank: Clear that interest rate trajectory is downward, both in terms of lending rates and deposit rates. But the downward movement is likely to be limited given that inflation is expected to rise going ahead.
15.27 pm: Here is our take on stocks which are likely to benefit the most from the rate cut by the RBI.
15.23 pm: Abheek Barua of HDFC Bank: No indication from the RBI about any kind of easing of inflation in the second half. Will remain cautious going into the second half of the year.
15.20 pm: Our final review of the policy review is out on our website. Please take a look.
“The Reserve Bank of India (RBI) on Wednesday retained FY18 growth projection (GVA) at 7.3 percent, while effecting a 25-basis points (bps) cut in repo rate.
"External demand conditions are gradually improving and should support the domestic economy, although global political risks remain significant. Keeping in view these factors, the projection of real GVA growth for 2017-18 has been retained at the June 2017 projection of 7.3 per cent, with risks evenly balanced," the RBI said in its third bi-monthly policy review for FY18.”
15.18 pm: RBI sets Rs 5,000 cr limit for FPIs for long interest rate futures.
15.16 pm: Ananth Narayan of Standard Chartered: Unlikely to see too many rate cuts going forward; was a very neutral policy
15.14 pm: MPC member Acharya: To come out with final guidelines for tri-party repo by mid-August
15.11 pm: RBI to release new norms for forex hedging after govt notifies FEMA
15.10 pm: MPC member Acharya: Working on the next step towards resolution of stressed assets
15.07 pm: RBI: Noting that the trajectory of inflation in the baseline projection is expected to rise from current lows, the MPC decided to keep the policy stance neutral and to watch incoming data.
15.05 pm: RBI: The MPC observed that while inflation has fallen to a historic low, a conclusive segregation of transitory and structural factors driving the disinflation is still elusive. In respect of inflation-sensitive vegetables, prices are recording spikes.
15.04 pm: Urjit Patel: Real rates one of the driving factors behind our decision, not the only factor
15.03 pm: Urjit Patel: There is room for banks to transmit more for sectors that have not yet availed the full benefit of rate cuts from the central banks.
15.02 pm: Urjit Patel: Transmission has been much stronger in new lending, particularly in personal loans and home loans.
14.58 pm: MPC member Acharya: Internal group to study MCLR and submit report by September 24.
14.55 pm: Urjit Patel: There is an urgent need to reinvigorate private investment.
14.53 pm: MPC member Acharya: Currency in circulation is showing early signs of normalisation. However, liquidity remains at a surplus.
14.51 pm: MPC maintains FY18 GVA forecast at 7.3 percent
14.50 pm: Urjit Patel: The MPC's focus remains on the 4 percent headline inflation target
14.49 pm: Urjit Patel: Considering that inflation is expected to rise for the rest of the year, the MPC has maintained its neutral stance.
14.48 pm: RBI: If states choose to implement salary and allowance increases similar to the Centre in the current financial year, headline inflation could rise by an additional estimated 100 basis points above the baseline over 18-24 months.
14.47 pm: RBI: There are several factors contributing to uncertainty around the baseline inflation trajectory. Implementation of farm loan waivers by States may result in possible fiscal slippages and undermine the quality of public spending, entailing inflationary spillovers.
14.44 pm: RBI: The weakness in the capex cycle was also evident in the number of new investment announcements falling to a 12-year low in Q1, the lack of traction in the implementation of stalled projects, deceleration in the output of infrastructure goods, and the ongoing deleveraging in the corporate sector.
14.43 pm: RBI: Industrial performance has weakened in April-May 2017. This mainly reflected a broad-based loss of speed in manufacturing. Excess inventories of coal and near stagnant output of crude oil and refinery products combined to slow down mining activity.
14.42 pm: Our first look at the policy review is up on our website. Please check it out.
"The Reserve Bank of India (RBI) on Wednesday cut its key lending rate—the repo rate—by 25 basis points (0.25 percentage points) to 6 percent, triggering hope of lower borrowing costs for households, and companies ahead of the festival season.
The six member monetary policy committee (MPC), headed by new RBI governor Urjit Patel, was of the view that the moderation in price trends have persisted long enough to warrant lower loan costs, necessary to engineer a quick industrial turnaround and goad people to spend more."
14.40 pm: MPC Member Ravindra Dholakia voted for 50 bps cut in repo rate. RBI ED Michael Patra, who is also a member of the MPC, voted in favour of a status quo policy.
14.39 pm: RBI: The initial uncertainty surrounding sowing of pulses barring tur and rice in some regions has also largely dissipated. Sowing of cotton and coarse cereals has exceeded last year’s levels but for oilseeds, it is lagging. Overall, these developments should help achieve the crop production targets for 2017-18 set by the Ministry of Agriculture at a higher level than the peak attained in the previous year.
14.38 pm: RBI: Since the June 2017 meeting of the MPC, impulses of growth have spread across the global economy albeit still lacking the strength of a self-sustaining recovery...On the domestic front, a normal and well-distributed south-west monsoon for the second consecutive year has brightened the prospects of agricultural and allied activities and rural demand.
14.36 pm: RBI: The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.
14.35 pm: "Entire financial business community expected it. Food prices, barring one or two things are lower…the MPC has taken the right decision,” Parekh told CNBC-TV18.
14.33 pm: Deepak Parekh: It's not a surprise. GST implementation was not as bad as we had expected. The MPC has taken the right decision.
14.31 pm: Four MPC members voted in favour of a 25 bps cut in repo rate.
14.30 pm: RBI MPC cuts repo rate by 25 basis points.
14.27 pm: Another reason for the RBI to consider cutting repo rate by 50 bps instead of the expected 25 is that factory output – a good indicator of both industrial activity and mood of shoppers – crawled at 1.7 percent in May. The manufacturing sector, which accounts for 75 percent of total factory output measured by the index of industrial production (IIP), fared even worse growing 1.2 percent during May.
14.25 pm: Ahead of the announcement, rate sensitive stocks traded mixed as investors were still unsure about the decision of the central bank. Banking stocks traded in the red, with the PSU bank index on Nifty falling quarter of a percent. Meanwhile, the Bank Nifty fell nearly one tenth of a percent. Meanwhile, the BSE banking index was trading almost flat with a positive bias.
14.23 pm: Pranjul Bhandari, Chief India Economist at HSBC expects RBI to cut rates by 25 bps. She also believes that RBI could speak about bonds and global developments as risks. Bhandari added that 50 bps cut would result in a positive surprise.
14.20 pm: YES Bank's Chief Economist Shubhada Rao said a 50 bps rate cut "will be more effective" and that inflation is on a "benign" trajectory.
14.05 pm: Given that macro-economic conditions favour a rate cut at this point in time, it would have been safe to assume, even a month ago, that the RBI will cut rates in August. However, something far more unprecedented and impactful happened 48 before the MPC was scheduled to announce its rate action. The country's largest lender State Bank of India cut its interest rate on savings accounts by 50 basis points.
Market participants believe that this move by SBI will put matters in a different perspective for the MPC. Lending rates are bound to fall, even if no rate cut is announced. Will this push the MPC to cut rates by a higher amount? Or will it reiterate that banks always have the room to transmit more on their end? Stay tuned to find out.
13.55 pm: "Benchmark indices continued to be sluggish as investors could be sitting on the fence ahead of the outcome of Reserve Bank of India’s monetary policy committee’s (MPC) meeting.
The Sensex was down 25.39 points at 32549.78, while the Nifty was down 14.30 points at 10100.35. The market breadth was negative as 1117 shares advanced against a decline of 1254 shares, while 141 shares were unchanged."
13.50 pm: Our preview of the policy review is up on the website. Please take a look.
"In an about an hour from now, the Reserve Bank of India (RBI) will announce its third bi-monthly monetary policy for 2017-18, amid heightened expectations of a cut in the repo rate—its key lending rate.
On the face of it, conditions could not have been more conducive for a rate cut. India’s inflation rates have slowed to record lows and food prices have been falling. Consumer price index (CPI)—commonly referred to as retail inflation and RBI’s main guide for gauge economy-wide price trends—has moderated sharply to 1.54 percent in June, the lowest since the index was rebased to 2012 in a new data series."
13.45 pm: Irrespective of how much the MPC decides to cut repo rate by, any rate cut would mean that the RBI's key policy rate will be at its lowest in over six and a half years. The lowest repo rate in the last 12 years was 4.75 percent in 2009.
13.35 pm Experts believe that the 6-member MPC will have its job cut out this time around, considering that the nation has witnessed not one but two systemic disruptions since its inaugural policy review -- demonetisation and GST. Many are of the opinion that a 25 basis point cut in repo rate, which is what the market is expecting, may not be enough to offset these disruptions.
Also, since inflation has eased to record lows and the monsoon has panned out well this year, there is widespread advocacy for a more substantial rate cut.
13.05 pm: Some market participants are of the opinion that the MPC may decide to act more aggressively than expected and cut repo rate by 50 basis points instead of 25. This is primarily because Consumer Price Index (CPI) inflation fell to a record low of 1.54 percent in June.
In fact, considering that inflation has been trending lower for the past few months, MPC member Ravindra Dholakia had advocated a 50 basis point cut in rates at the last policy review itself. However, the committee decided to hold fire and wait for more data pertaining to inflation in order to render a more informed judgement.
13.00 pm: The MPC is expected to cut the benchmark repo rate by 25 basis points to 6.00 percent, considering inflation has cooled off in recent months. The last time the MPC revised the key policy rate was at its inaugural policy review in October last year, when the repo rate was cut by 25 basis points to 6.25 percent.
12.52 pm: Hello and welcome to the live coverage of RBI's monetary policy review. The Monetary Policy Committee (MPC), which is meeting for 6th time since its inception, is expected to announce its rate action at 2.30 pm. Stay tuned for more updates.
20.06 pm:
Here's what fund managers had to say about the monetary policy.
19.45 pm:
Despite the monetary easing the question still remains whether it will be passed on to the end consumer or not?
19.00 pm:
Real estate and banking experts anticipate the home loan interest rate to hover around 8 percent once the banks decide to pass on the benefit to consumers.
18.38 pm:
A rate cut just ahead of the festive season augurs well for the rate sensitive sectors such as banks, NBFCs, automobiles and capital goods. Read more
18.11 READ:RBI comfortable with repo rate vs CPI target rate: Deputy Governor Viral Acharya
Nifty Bank ends at 25.055.20, down 67 points from previous close. Benchmark indices Sensex and Nifty end marginally down. Market participants said that the lacklustre response from the stock market was because a 25 bps rate cut was already factored in.
KVS Manian of Kotak Mahindra Bank: Any rate cut from here on has to be data driven, particularly inflation data driven.
KVS Manian of Kotak Mahindra Bank: Clear that interest rate trajectory is downward, both in terms of lending rates and deposit rates. But the downward movement is likely to be limited given that inflation is expected to rise going ahead.
Here is our take on stocks which are likely to benefit the most from the rate cut by the RBI.
Abheek Barua of HDFC Bank: No indication from the RBI about any kind of easing of inflation in the second half. Will remain cautious going into the second half of the year.
Our final review of the policy review is out on our website. Please take a look.
“The Reserve Bank of India (RBI) on Wednesday retained FY18 growth projection (GVA) at 7.3 percent, while effecting a 25-basis points (bps) cut in repo rate.
"External demand conditions are gradually improving and should support the domestic economy, although global political risks remain significant. Keeping in view these factors, the projection of real GVA growth for 2017-18 has been retained at the June 2017 projection of 7.3 per cent, with risks evenly balanced," the RBI said in its third bi-monthly policy review for FY18.”
RBI set Rs 5,000 cr limit for FPIs for long interest rate futures.
Ananth Narayan of Standard Chartered: Unlikely to see too many rate cuts going forward; was a very neutral policy
MPC member Acharya: To come out with final guidelines for tri-party repo by mid-August
RBI to release new norms for forex hedging after govt notifies FEMA
MPC member Acharya: Working on the next step towards resolution of stressed assets
RBI: Noting that the trajectory of inflation in the baseline projection is expected to rise from current lows, the MPC decided to keep the policy stance neutral and to watch incoming data.
RBI: The MPC observed that while inflation has fallen to a historic low, a conclusive segregation of transitory and structural factors driving the disinflation is still elusive. In respect of inflation-sensitive vegetables, prices are recording spikes.
Urjit Patel: There is room for banks to transmit more for sectors that have not yet availed the full benefit of rate cuts from the central banks.
Urjit Patel: Real rates one of the driving factors behind our decision, not the only factor
Urjit Patel: Transmission has been much stronger in new lending, particularly in personal loans and home loans.
MPC member Acharya: Internal group to study MCLR and submit report by September 24
Urjit Patel: There is an urgent need to reinvigorate private investment.
MPC member Acharya: Currency in circulation is showing early signs of normalisation. However, liquidity remains at a surplus.
MPC maintains FY18 GVA forecast at 7.3 percent
Urjit Patel: Considering that inflation is expected to rise for the rest of the year, the MPC has maintained its neutral stance.
Urjit Patel: The MPC's focus remains on the 4 percent headline inflation target
RBI: If states choose to implement salary and allowance increases similar to the Centre in the current financial year, headline inflation could rise by an additional estimated 100 basis points above the baseline over 18-24 months.
RBI: There are several factors contributing to uncertainty around the baseline inflation trajectory. Implementation of farm loan waivers by States may result in possible fiscal slippages and undermine the quality of public spending, entailing inflationary spillovers.
RBI: The weakness in the capex cycle was also evident in the number of new investment announcements falling to a 12-year low in Q1, the lack of traction in the implementation of stalled projects, deceleration in the output of infrastructure goods, and the ongoing deleveraging in the corporate sector.
RBI: Industrial performance has weakened in April-May 2017. This mainly reflected a broad-based loss of speed in manufacturing. Excess inventories of coal and near stagnant output of crude oil and refinery products combined to slow down mining activity.
Our first look at the policy review is up on our website. Please check it out.
"The Reserve Bank of India (RBI) on Wednesday cut its key lending rate—the repo rate—by 25 basis points (0.25 percentage points) to 6 percent, triggering hope of lower borrowing costs for households, and companies ahead of the festival season.
The six member monetary policy committee (MPC), headed by new RBI governor Urjit Patel, was of the view that the moderation in price trends have persisted long enough to warrant lower loan costs, necessary to engineer a quick industrial turnaround and goad people to spend more."
MPC Member Ravindra Dholakia voted for 50 bps cut in repo rate. RBI ED Michael Patra, who is also a member of the MPC, voted in favour of a status quo policy.
RBI: The initial uncertainty surrounding sowing of pulses barring tur and rice in some regions has also largely dissipated. Sowing of cotton and coarse cereals has exceeded last year’s levels but for oilseeds, it is lagging. Overall, these developments should help achieve the crop production targets for 2017-18 set by the Ministry of Agriculture at a higher level than the peak attained in the previous year.
RBI: Since the June 2017 meeting of the MPC, impulses of growth have spread across the global economy albeit still lacking the strength of a self-sustaining recovery...On the domestic front, a normal and well-distributed south-west monsoon for the second consecutive year has brightened the prospects of agricultural and allied activities and rural demand.
RBI: The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.
"Entire financial business community expected it. Food prices, barring one or two things are lower…the MPC has taken the right decision,” Parekh told CNBC-TV18.
Deepak Parekh: It's not a surprise. GST implementation was not as bad as we had expected. The MPC has taken the right decision.
Four MPC members voted in favour of a 25 bps cut in repo rate.
RBI MPC cuts repo rate by 25 basis points.
Another reason for the RBI to consider cutting repo rate by 50 bps instead of the expected 25 is that factory output – a good indicator of both industrial activity and mood of shoppers – crawled at 1.7 percent in May. The manufacturing sector, which accounts for 75 percent of total factory output measured by the index of industrial production (IIP), fared even worse growing 1.2 percent during May.
Ahead of the announcement, rate sensitive stocks traded mixed as investors were still unsure about the decision of the central bank. Banking stocks traded in the red, with the PSU bank index on Nifty falling quarter of a percent. Meanwhile, the Bank Nifty fell nearly one tenth of a percent. Meanwhile, the BSE banking index was trading almost flat with a positive bias.
Pranjul Bhandari, Chief India Economist at HSBC expects RBI to cut rates by 25 bps. She also believes that RBI could speak about bonds and global developments as risks. Bhandari added that 50 bps cut would result in a positive surprise.
YES Bank's Chief Economist Shubhada Rao said a 50 bps rate cut "will be more effective" and that inflation is on a "benign" trajectory.
Given that macro-economic conditions favour a rate cut at this point in time, it would have been safe to assume, even a month ago, that the RBI will cut rates in August. However, something far more unprecedented and impactful happened 48 before the MPC was scheduled to announce its rate action. The country's largest lender State Bank of India cut its interest rate on savings accounts by 50 basis points.
Market participants believe that this move by SBI will put matters in a different perspective for the MPC. Lending rates are bound to fall, even if no rate cut is announced. Will this push the MPC to cut rates by a higher amount? Or will it reiterate that banks always have the room to transmit more on their end? Stay tuned to find out.
"Benchmark indices continued to be sluggish as investors could be sitting on the fence ahead of the outcome of Reserve Bank of India’s monetary policy committee’s (MPC) meeting.
The Sensex was down 25.39 points at 32549.78, while the Nifty was down 14.30 points at 10100.35. The market breadth was negative as 1117 shares advanced against a decline of 1254 shares, while 141 shares were unchanged."
"Benchmark indices continued to be sluggish as investors could be sitting on the fence ahead of the outcome of Reserve Bank of India’s monetary policy committee’s (MPC) meeting.
The Sensex was down 25.39 points at 32549.78, while the Nifty was down 14.30 points at 10100.35. The market breadth was negative as 1117 shares advanced against a decline of 1254 shares, while 141 shares were unchanged."
Our preview of the policy review is up on the website. Please take a look.
"In an about an hour from now, the Reserve Bank of India (RBI) will announce its third bi-monthly monetary policy for 2017-18, amid heightened expectations of a cut in the repo rate—its key lending rate.
On the face of it, conditions could not have been more conducive for a rate cut. India’s inflation rates have slowed to record lows and food prices have been falling. Consumer price index (CPI)—commonly referred to as retail inflation and RBI’s main guide for gauge economy-wide price trends—has moderated sharply to 1.54 percent in June, the lowest since the index was rebased to 2012 in a new data series."
Irrespective of how much the MPC decides to cut repo rate by, any rate cut would mean that the RBI's key policy rate will be at its lowest in over six and a half years. The lowest repo rate in the last 12 years was 4.75 percent in 2009.
