RBI Monetary Policy Committee Highlights: The Monetary Policy Committee (MPC) kept key repo rate unchanged but hiked the reverse repo rate by 40 bps to 3.75 percent on April 8 and emphasized on the need of withdrawal of accommodation in its first policy meeting of FY23. This is the eleventh time in a row that the MPC headed by RBI Governor Shaktikanta Das has maintained the status quo of repo rate.
Here are the key takeaways of Reserve Bank of India Governor Shaktikanta Das’ speech:
The MPC has kept the repo rate unchanged at 4 percent while increasing the reverse repo rate to 3.75 percent from 3.35 percent earlier. Also, the panel continued with the so-called ‘accommodative’ stance in the backdrop of elevated level of inflation and heightening of geo-political tensions.
“MPC voted unanimously to leave the repo rate unchanged at 4 percent and to keep stance accommodative”, RBI Governer Shaktikanta Das said in his speech. However, reverse repo rate was hiked to ensure liquidity.
RBI also rewrites its stance to less accommodative as it rephrases its accommodative stance to focus on withdrawal of accommodation.
It insisted on gradual, calibrated withdrawal of liquidity over multi-year time frame, in a non-disruptive manner beginning this year.
Inflation is now projected to be higher and growth lower than February’s expectations.
The RBI lowered is projected GDP growth for FY23 to 7.2 percent from 7.8 percent that was projected in the last meeting. Assuming oil at $100. GDP growth seen at 16.2 percent in April-June 2022; at 6.2 percent in July-September 2022; at 4.1 percent in October-December 2022; and at 4.0 percent in January-March 2023.
CPI inflation seen averaging higher 5.7 percent in FY23 compared to 4.5 percent projected earlier. It is seen averaging 6.3 percent in April-June 2022; seen averaging 5.0 percent in July-September 2022; seen averaging 5.4 percent in October-December 2022; and seen averaging 5.1 percent in January-March 2023.
Spike in crude oil since February end poses substantial risk to inflation. The projection of inflation is fraught with risk and contingent to global crude prices.
“Projection of global inflation ratcheted up risks of sizeable impact across geographies in global production. Cost pressure and supply chain disruptions are likely to linger on”, Das said
RBI has decided to restore liquidity adjustment facility (LAF) corridor to 50 bps, as it was before the pandemic. MSF Rate and Bank Rate remain unchanged at 4.25 percent.
The central bank has introduced Standing Deposit Facility SDF), which will form the floor of the Liquidity Adjustment Facility corridor.
The governor pointed out that normalisation of LAF corridor done today should not come as a suprise to market participants. According to him the financial markets were prepared for the LAF corridor over past several months.
SDF is being introduced to provide symmetry to operating framework of monetary policy and will have 3.75 percent interest rate. Access to SDF, MSF will be at the discretion of the banks.
RBI expects CAD to stay at sustainable levels during the current financial year which can be financed with normal capital flows.
Overview
Since March 2020, the central bank has cut its key lending rate, or repo rate, by 115 basis points to support the economy in the face of economic fallout from the pandemic.
The RBI last cut its policy rate on May 22, 2020 in an off-policy cycle when COVID-19 posed an unprecedented challenge to the economy. Since then, the central bank has maintained the repo rate-- the rate at which RBI lends money to commercial banks -- steady at a 19-year low of 4 percent. The reverse repo rate -- the rate at which the RBI borrows from banks -- is 3.35 percent.
The government has mandated the central bank to keep the inflation rate at 4 percent (+,- 2 percent).
Factors of importance
The ongoing Russia-Ukraine conflict and surging oil prices are pushing the cost of commodities higher, resulting in rising inflationary trends.
The government has mandated the central bank to keep the inflation at 4 percent, with an upper and lower tolerance level of 2 percent.
After the February MPC meeting, the RBI had decided to hold its key lending rates steady at record low levels for the 10th straight meeting to support a durable recovery of the economy.
Schedule for FY23
Meanwhile, the RBI has released a detailed the meeting schedule of its MPC for FY23.
As per the RBI Act, the MPC must meet a minimum of four times in a year, with the meeting schedule for a year to be published by the central bank at least one week before the first meeting for that year.
The six-member MPC is widely expected to make no change to the policy repo rate in its first meeting of FY23. This was held between April 6-8.
Further, the next MPC will meet on June 6-8, August 2-4, September 28-30, and December 5-7, before closing out FY23 with its final meeting in February 6-8, 2023, the RBI said in a statement on March 30.
The RBI will release its six-monthly Monetary Policy Report next week along with the MPC's resolution. The Monetary Policy Report will be keenly eyed for the central bank's inflation forecasts and the assumptions underpinning them.
With global crude oil prices skyrocketing in the wake of Russia's invasion of Ukraine, all eyes will be on the price of India's crude oil basket the RBI assumes in its models while arriving at its inflation forecast.
Stay tuned for the latest news, developments and updates on the expectations, announcement and reactions today!
The live blog session has concluded. For more news, views and updates, stay tuned with Moneycontrol.com.
RBI Monetary Policy Committee LIVE Updates:
"We continue to expect the RBI to make the first rate hike move in June, failing which August would be a certainty. However, we fear that any delay in rate hike would force the RBI to possibly do a Fed (Federal Reserve) and start tightening at a much faster pace, choking the process of recovery," saidKunal Kundu, India Economist, Societe Generale.
RBI Monetary Policy Committee LIVE Updates: Fiscal deficit to GDP ratio for FY22 may come out better than projected, says Rupa Rege Nitsure, Group Chief Economist, L&T Financial Holdings
"India's real GDP growth at 5.4% in Q3 of FY22 is primarily driven by a strong growth in the services sector's value and a pick-up in private final consumption spending. While growth in agriculture has slowed in Q3, the construction sector has become negative,"Nitsure said."On the positive side, the levels of real spending, whether by the private sector or the government sector, are higher than the pre-pandemic levels. Given the encouraging trends in government's revenues and spending until January 2022, and the upward revision in the nominal GDP growth rate for FY22, the fiscal deficit to GDP ratio for FY22 may come out to be better than what was projected in the (Union) Budget," she added. (Reuters)
RBI Monetary Policy Committee LIVE Updates: MPC's caution over growth trajectory, worry over inflation are key takeaways: DBS Bank Economist Radhika Rao
"Among the key takeaways from the policy review was firstly the MPC's caution over the growth trajectory, and worry over persistent inflation, which was underscored by a 60 bps cut in the growth projection and 120 bps increase in the inflation forecast, backed by a sharp $25 per barrel increase in the underlying crude oil price assumption," said Radhika Rao, Economist, DBS Bank.
"Policymakers also acknowledged fluidity in the geopolitical situation and its spillover on the commodity universe. Secondly, a tweak in the guidance to acknowledge the need to start withdrawal of accommodation leaves the June rate review live for a change in the stance to neutral and explore rate hikes thereafter," she added.
RBI Monetary Policy Committee LIVE Updates: MPC Analysis | Das finally picks inflation over growth, how soon will MPC hike rates?
The Reserve Bank of India’s Monetary Policy Committee (MPC) has strongly pursued a growth-supportive policy stance ever since the coronavirus outbreak. Shoring up the economy was its sole focus. On April 8, too, Governor Shaktikanta Das reiterated the RBI’s commitment to safeguarding the nascent recovery in the economy. He did so by keeping the policy repo rate steady and continuing with the accommodative (growth-supportive) stance.
Yet, fresh worries are emerging. While growth focus remains, the difference this time is that the MPC has clearly acknowledged that inflation has emerged as a bigger concern requiring urgent policy attention. Read analysis here
RBI Monetary Policy Committee LIVE Updates: D-Street experts cheer growth focus amid inflation scare
Market experts cheered the continued focus on growth by the Reserve Bank of India’s MPCin its first bi-monthly meeting for the current financial year.
Dalal Street veterans said that the focus on growth even when inflation pressure in the economy is rising bodes well for investors, given that the economic recovery is still not broad-based in the central bank’s own assessment. Read full here
RBI Monetary Policy Committee LIVE Updates: These 10 rate-sensitive stocks look bright as RBI keeps monetary policy on expected lines
Moneycontrol has collated a list of rate-sensitive stocks that may be a good buy at current levels or on dips from a 2-3 weeks' perspective. Returns are calculated based on April 7 closing price.... Read More
RBI Monetary Policy Committee LIVE Updates: RBI monetary policy risks failure if crude oil averages $110 a barrel in FY23
The Reserve Bank of India (RBI) may fail to meet its inflation mandate if the average price of the country's crude oil basket is $110 per barrel in FY23.
According to the central bank's six-monthly Monetary Policy Report, released on April 8, if the crude oil prices are 10 percent higher in the current financial year than the baseline assumption of $100 per barrel, it will push up the Consumer Price Index (CPI) inflation by around 30 basis points from the baseline trajectory.
In fact, the report warned that the global crude oil prices could "easily" test $150 per barrel if geopolitical tensions escalate and crude oil inventories reduce. Read details here
RBI Monetary Policy Committee LIVE Updates: Radhika Rao, Economist, DBS Bank
"Among the key takeaways from the policy review was firstly the MPC's caution over the growth trajectory, and worry over persistent inflation, which was underscored by a 60 bps cut in the growth projection and 120 bps increase in the inflation forecast, backed by a sharp $25 per barrel increase in the underlying crude oil price assumption." "Policymakers also acknowledged fluidity in the geopolitical situation and its spillover on the commodity universe. Secondly, a tweak in the guidance to acknowledge the need to start withdrawal of accommodation leaves the June rate review live for a change in the stance to neutral and explore rate hikes thereafter." "Next, the introduction of the Standing Deposit Facility and restoration of the LAF corridor to pre-pandemic levels marked another step towards normalisation. Lastly, besides the held-to-maturity restoration, markets still await clear signals on the shape and form of the central bank's support for bond markets." (Reuters)
RBI Monetary Policy Committee LIVE Updates: Shaktikanta Das quotes Gandhi at MPC briefing, check what else RBI Governor said
On April 8, Reserve Bank of India (RBI) Governor Shaktikanta Das announced that the Monetary Policy Committee of RBI has kept the repo rate and the reverse repo rate unchanged at 4 percent and 3.35…... Read More
RBI Monetary Policy Committee LIVE Updates: Prithviraj Srinivas, Chief Economist, Axis Capital
"The RBI MPC review indicates a resolve to tackle high inflation and low growth setting this year. In terms of action, the LAF corridor has been narrowed to pre-pandemic level of 50 bps by introducing a new liquidity absorption tool, the SDF, at 25 bps below 4% policy repo rate. This will effectively increase overnight money market rates by 40 bps since erstwhile reverse repo rate at 3.35% is practically made redundant." "In terms of guidance, the language now has a phrase that speaks of focussing on gradual withdrawal in accommodation. This was backed up by the governor's statement that the excess banking sector liquidity build-up as a result of liquidity infusion during the pandemic would be gradually reduced over a multi-year period." "Overall, the MPC's review shows that the RBI is ready to steer monetary policy out of crisis-level accommodation. We expect 100-150 bps in repo rate hikes over the next 12-18 months to take real policy rate to neutral from about negative 2% currently." (Reuters)
RBI Monetary Policy Committee LIVE Updates: Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities
"The policy decisions are in line with our expectations on the repo rate and stance. The rate corridor has now effectively reduced to 25 bps, compared with 65 bps earlier. The SDF window will become the new floor at 3.75%, even as reverse repo rate is at 3.35%.""The policy has decidedly shifted away from being dovish. The RBI's concern on inflation has increased significantly, especially with the FY2023 average inflation estimate revised up to 5.7% from 4.5%. The concern on growth is relatively lower in this policy, even as FY2023 GDP growth estimate has been lowered to 7.2% from 7.8%. Commitment has also been made to start withdrawal of liquidity from FY2023 and over the next few years." "This policy strengthens our view that the first repo rate hike will be in the August. We expect the stance to be changed to 'neutral' from 'accommodative' in the June policy." (Reuters)
RBI Monetary Policy Committee LIVE Updates: First Take | RBI signals monetary policy ready to pivot (MC PRO)
Central bank effectively hikes reverse repo rate by 40 basis points while remaining accommodative... Read More
RBI Monetary Policy Committee LIVE Updates: Sujan Hajra, Chief Economist & ED, Anand Rathi Shares & Stock Brokers
"With today's measures, the RBI has moved to a path of gradual increase of policy interest rate and phased withdrawal of liquidity. From a medium-term perspective, the measures are supportive of growth, price stability, and orderly development in the financial markets." (Reuters)
RBI Monetary Policy Committee LIVE Updates: Das finally picks inflation over growth, how soon will MPC hike rates? Find Out Here
The Reserve Bank of India’s Monetary Policy Committee (MPC) has strongly pursued a growth-supportive policy stance ever since the coronavirus outbreak. Shoring up the economy was its sole focus. On April 8, too, Governor Shaktikanta Das reiterated the RBI’s commitment to safeguarding the nascent recovery in the economy. He did so by keeping the policy repo rate steady and continuing with the accommodative (growth-supportive) stance. Read More
RBI Monetary Policy Committee LIVE Updates: RBI no longer remains a stout dove: Madhavi Arora, Emkay Global
The policy calibration is well appreciated -- crawling towards withdrawal of “ultra accommodation”, with policymakers making the liquidity normalisation long drawn multi-year process. However with reaction function pivoting back towards inflation over growth as policy priority, the policy bias is clear. To that extent RBI no longer remains a stout dove and the reaction function is now evolving with fluid macro realities,'' said Madhavi Arora, Lead Economist, Emkay Global Financial Services.
RBI Monetary Policy Committee LIVE Updates: Liquidity withdrawal will be done in multi-year time frame: RBI Governor
The Reserve Bank of India (RBI) has implemented a 3.75 percent Standing Deposit Facility (SDF) as part of its liquidity management strategy. The Central bank has introduced the Standing Deposit Facility (SDF) at 3.75 percent to absorb excess liquidity. It has also decided to restore the liquidity adjustment facility (LAF) corridor and Marginal Standing Facility (MSF) at 4.25 percent. Stating that the economic activity is barely above pre-pandemic levels but continues to steadily recover, RBI Governor Shaktikanta Das said the Central bank would engage in a gradual withdrawal of liquidity over a multi-year timeframe beginning this year. Read More
RBI Monetary Policy Committee LIVE Updates: RBI likely to change stance to neutral in next policy: Sakshi Gupta, Senior Economist, HDFC Bank
"Recognising inflationary risks, the RBI raised its inflation to 5.7% (up by 120 bps) and lowered its growth forecast to 7.2%. The hawkish turn was warranted and it is likely that the central bank will change its stance to neutral in the coming policy, followed by a repo rate hike sooner than earlier expected. The 10-year bond yield is likely to move towards 7%-7.25% over the coming weeks,'' said Sakshi Gupta, Senior Economist, HDFC Bank
RBI Monetary Policy Committee LIVE Updates: Time to prioritise inflation over growth: RBI Governor Shaktikanta Das
Inflation projections have been primarily revised upwards due to war-induced factors, according to Reserve Bank of India (RBI) Governor Shaktikanta Das. "In the sequence of priorities, we have now put inflation before growth. Time is appropriate to prioritise inflation ahead of growth," the RBI governor said. Read More
RBI Monetary Policy Committee LIVE Updates: RBI enhanced HTM limit could calm bond markets: Garima Kapoor, Elara Capital
"With recovery in the Indian economy still at a nascent stage and risks to growth enhanced despite elevated inflation, we expect the MPC to move to a neutral stance in August policy and anticipate a repo rate hike in H2 of FY23. Amid inability to explicitly support the government borrowing program, the RBI enhanced HTM limit by 100 bps, which could calm the bond markets despite a sharp increase in inflation forecast,'' said Garima Kapoor, economist institutional equities at Elara Capital.
RBI Monetary Policy Committee LIVE Updates: RBI Governor Shaktikanta Das on Rupee-Ruble trade
"If and when some rupee-ruble trade mechanism is worked out, you will get to know. Exporters and importers have an issue. They have represented to both the government and the RBI. We are in discussions with the government. We are sensitive to the sanctions and the entire thing is under examination. No decision has been taken."
RBI Monetary Policy Committee LIVE Updates:
We are in a position to start testing and conducting the CBDC pilot project: RBI Deputy Governor T Rabi Sankar
RBI Monetary Policy Committee LIVE Updates: RBI on Indo-Russian trade & sanctions on Russia
RBI Governor Shaktikanta Das: As far as RBI is concerned, will not do anything that goes against the sanctions (imposed on Russia)
RBI Deputy Governor T Rabi Sankar: Not aware of any platform for Indo-Russian trade. Anthing we do will be sensitive to the sanctions that have been imposed (on Russia).
RBI Monetary Policy Committee LIVE Updates: Have received HDFC-HDFC Bank merger proposal & will examine
"I don't want to comment on individual cases, but we have received a proposal for the HDFC-HDFC Bank merger. We will examine them. When we take a decision, we will inform you. Beyond that, it would not be right to say what will be our approach in this case," saysRBI Governor Shaktikanta Das
RBI Monetary Policy Committee LIVE Updates:
As far as RBI is concerned, will not do anything that goes against the sanctions (imposed on Russia):
RBI Governor Shaktikanta DasRBI Monetary Policy Committee LIVE Updates: RBI's Policy moves
Rajeshwar Rao, RBI Deputy Governor on frauds: Looking at potential amendments in KYC norms if required
Michael Patra, RBI Deputy Governor on policy: Have started the process of withdrawal of accommodation
RBI Governor Shaktikanta Das on SDF: No proposal to allow non-banks to participate in SDF
RBI Monetary Policy Committee LIVE Updates:
SDF will give us flexibility without the constraint of a collateral. Both SDF & MSF will now move in tandem with any future revision in repo rate. Don't think RBI is behind the curve, G-SAP stopped in October 2021, outright open market operations have been far less. Orderly evolution of yield curve is important and remains a public good:
RBI Governor Shaktikanta DasRBI Monetary Policy Committee LIVE Updates: With a strong external sector, India fit to withstand war and volatility headwinds: RBI Governor Shaktikanta Das
High foreign exchange reserves, manageable current account deficit, and a strong financial system add to the strength of the Indian economy to face mounting global pressure, says RBI Governor…... Read More
RBI Monetary Policy Committee LIVE Updates: Key takeaways from Governor Shaktikanta Das' address (2/2)
>> Crude oil price seen at $100 a barrel. The revised assumption of the crude oil price for making inflation and growth forecasts is sharply higher than the previous one.
>> The central bank has decided to restore liquidity adjustment facility (LAF) corridor to 50 basis point, seen as a first step to move away from the ultra loose monetary policy adopted during the COVID-19 pandemic. MSF Rate and Bank Rate remain unchanged at 4.25 percent.
>> The central bank has introduced Standing Deposit Facility (SDF), which will form the floor of the Liquidity Adjustment Facility corridor.
>> The RBI expects the current account deficit to stay at sustainable levels during the current financial year, which it said can be financed with normal capital flows.
RBI Monetary Policy Committee LIVE Updates: Key takeaways from Governor Shaktikanta Das' address (1/2)
>> The repo rate has been left unchanged at 4 percent so has the reverse repo rate to 3.35 percent. The panel decided to continue with the so-called “accommodative” stance in the backdrop of elevated level of inflation and heightening of geo-political tensions.
>> The rate-setting panel has insisted on gradual, calibrated withdrawal of liquidity over multi-year time frame, in a non-disruptive manner beginning this year.
>> Inflation is now projected to be higher and growth lower than February's expectations. The RBI lowered the projected GDP growth for FY23 to 7.2 percent from 7.8 percent in the last meeting. GDP growth seen at 16.2 percent in April-June 2022, 5.8 percent for July-September, 4.1 percent in October-December and at 4 percent in January-March 2023.
>> CPI inflation is seen averaging higher at 5.7 percent in FY23 compared to 4.5 percent projected earlier. It is projected at 6.3 percent in April-June quarter, 5 percent in July-September, 5.4 percent in October-December and 5.1 percent in January-March 2023.
RBI Monetary Policy Committee LIVE Updates:
Fixed-rate reverse repo kept at 3.35% because it has no use in liquidity management as of now: RBI Deputy Governor Michael Patra
RBI Monetary Policy Committee LIVE Updates:
Withdrawal of liquidity to be multi-year; can be two years, can be three years. It will depend on the evolving situation. Tectonic shifts have happened globally since February policy. Stance remains accommodative with a focus on withdrawal of accommodation. Situation is dynamic and fast changing - actions will be tailor-made according to it:
RBI Governor Shaktikanta DasRBI Monetary Policy Committee LIVE Updates:
Inflation projections primarily revised upwards due to war-induced factors. In the sequence of priorities, we have now put inflation before growth. Time is appropriate to prioritise inflation ahead of growth:
RBI Governor Shaktikanta DasRBI Monetary Policy Committee LIVE Updates: No action off the table to safeguard Indian economy: RBI Governor Shaktikanta Das
Governor Shaktikanta Das has said that RBI is braced to defend the Indian economy. "We are not hostage to any rulebook. No action is off the table when the need is to safeguard the Indian economy," Das said while announcing the Monetary Policy Committee (MPC) report. Read more here
RBI Monetary Policy Committee LIVE Updates: Forecasts assume crude oil price at $100 per barrel: RBI Governor Shaktikanta Das
The revised assumption of the crude oil price for making inflation and growth forecasts is sharply higher than the previous one.... Read More
RBI Monetary Policy Committee LIVE Updates: 10-year bond yield hits 7%, first time since June 2019
The yield on the 10-year government bond hit 7 percent on April 8 for the first time since June 2019 after the Reserve Bank of India raised its annual inflation forecast during its bi-monthly monetary policy review.
The bond yield hit a high of 7.007percent, a level last seen on June 13, 2019, up 9 basis points from its previous close of 6.913 percent. Bond yields and prices move in opposite directions. One basis point is one-hundredth of a percentage point.
The RBI raised its annual inflation forecast to 5.7 percent from 4.5 percent, while lowering the growth projection for FY23 to 7.2% from 7.8%. It also reduced the interest rate corridor to 50 basis points. Read full here
Market LIVE Updates: Indices trade lower amid volatility; metal, power stocks gain
-- India call rate jumps 50 basis points to 3.50%: India call rate jumps 50 basis points to 3.50% after RBI introduced Standing Deposit facility or SDF at 3.75%. This was in continuation of its approach towards liquidity management and normalization of LAF corridor.
-- Market at 11 AM: Indian benchmark indices were trading flat in the volatile session after RBI kept repo rate unchanged. The Sensex was up 29.42 points or 0.05% at 59064.37, and the Nifty was up 26.90 points or 0.15% at 17666.40. About 2141 shares have advanced, 856 shares declined, and 130 shares are unchanged.
Follow our Market LIVE coverage here
RBI Monetary Policy Committee LIVE Updates: CPI inflation projected at 5.7% for FY23, says Shaktikanta Das
Das explained that edible oil prices are likely to stay elevated in the near term and that spike in crude oil prices since end of February 2022 due to the Russia Ukraine crisis poses a substantial…... Read More
RBI Monetary Policy Committee LIVE Updates: FY23 GDP growth forecast lowered to 7.2 percent from 7.8 percent
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) estimated that the GDP growth rate for Financial Year 2022-23 would be at 7.2 percent. RBI Governor Shaktikanta Das said FY23 GDP growth forecast lowered to 7.2 percent from 7.8 percent.
The projection of GDP growth for 2022-23 is seen at 16.2% in Q1 (Apr-Jun 2022), 6.2% in Q2 (Jul-Sept 2022), 4.1% in Q3 (Oct-Dec 2022), and 4% in Q4 (Jan-Mar 2023). FY23 GDP projection has assumed crude oil prices at $100 per barrel, Shaktikanta Das said.
"Real GDP Growth for the year 2022-23 is now projected at 7.2% with Q1 2022-23 at 16.2%, Q2 at 6.2%, Q3 at 4.1% and Q4 at 4%, assuming crude oil that is Indian basket at USD 100 per barrel during the year 2022- 23, said RBI Governor Shaktikanta Das after the MPC review meeting. Read full here
RBI Monetary Policy Committee LIVE Updates: MPC keeps repo rate unchanged at 4%, retains accommodative stance
The Monetary Policy Committee (MPC) of the Reserve Bank of India retained the key policy rate, repo, at 4 percent on April 8. The MPC also retained the policy stance as ‘accommodative’ indicating that the rate-setting body is focused on boosting the economic growth. The reverse repo, or the rate at which the central bank borrows short-term funds from banks, has been kept unchanged at 3.35 percent.
India’s consumer price index (CPI) inflation rose to 6.07 percent in February 2022 from 6.01 in January 2022, data released on March 14 showed. It was 5.03 percent in February 2021. The MPC has the mandate to keep the inflation within the 2-6 percent range. Read details here
RBI Monetary Policy Committee LIVE Updates: India Inc earnings for Q4 likely to show the inflation fault lines
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RBI Monetary Policy Committee LIVE Updates: Quick recap of the top 10 key announcements by RBI Governor Shaktikanta Das
-- RBI MPC voted to keep rates unchanged, stays accommodative
-- RBI to restore the LAF corridor to 50 bps, pre-pandemic level
-- FY23 GDP forecast pegged at 7.2%, assuming crude at $100
-- CPI projected at 5.7% for FY23 vs 4.5% as seen previously
-- Financial markets prepared for LAF corridor over many months
-- Gradual withdrawal of liquidity over years, in non-disruptive manner
-- Money market opening restored to pre-Covid time of 9:00am
-- Banks can hold 23% of bonds as HTM through March 2023
-- CAD to stay sustainable, can be financed via normal capital flows
-- Cardless cash withdrawal at all bank branches and ATMs via UPI
Market LIVE Updates: Indices flat; GoI 10Y yield rises to 7%
-- Indices flat as RBI maintains ‘accommodative’ stance; GoI 10Y yield rises to 7%, highest since 2019
-- Among sectors, selling is seen in the IT and pharma names, while power, oil & gas and metal indices up 0.5-1 percent.
Follow our Market LIVE blog here
RBI Monetary Policy Committee LIVE Updates: Government 10 year bond yield hit 7%
The government 10 year bond yield hit 7%, first time since June 2019, after the Reserve Bank of India raised its annual inflation forecast. The bond yield hit a high of 7.007% -- a level last seen on 13 June 2019 -- up 9 basis points from its previous close of 6.913%. Bond yields and prices move in opposite directions.
The Reserve Bank of India has increased its annual inflation forecast to 5.7% from 4.5% earlier. The RBI also reduced interest rate corridor to 50 basis points. It lowered growth projection to 7.2% from 7.8% earlier. On record borrowing plans this fiscal year, RBI said it will use various instruments to complete government borrowings.
RBI has kept borrowing casts at a record low for an eleventh straight meeting. The MPC voted to keep the benchmark repurchase rate at 4% and retained its accommodative stance. It also said that the country is facing fresh challenges from war in Ukraine and covid lockdowns in China which risk exacerbating a global supply squeeze and price pressures.
RBI Monetary Policy Committee LIVE Updates: Sky may be overcast, but we will use all our energies to let sunlight shine on India's future, says RBI Governor Shaktikanta Das
"Braced to defend the Indian economy. We ar not hostage to any rulebook. No action is off the table when the need is to safeguard the Indian economy. Sky may be overcast, but we will use all our energies to let sunlight shine on India's future. It is the faith, that steers us through stormy seas, moves mountains and jumps across the ocean"
RBI Monetary Policy Committee LIVE Updates: RBI Governor Shaktikanta Das announces
-- Held-to-maturity limit to revert to 22 percent of banks' net demand and time liabilities in FY24.
-- RBI also proposes panel to review status of customer service at RBI-regulated entities
-- Cardless cash withdrawal to be made available at all bank branch and ATMs via UPI, to prevent frauds.To secure payment systems, propose guidelines for such operators
-- BBPS has seen rise in volumes, to encourage this further, propose to reduce networth requirement for such entities to Rs 25 crore vs Rs 100 crore
RBI Monetary Policy Committee LIVE Updates:
SDF, MSF will be available from 5:30 pm till midnight all days of the week. Money market opening time restore to 9:00 am, which is the pre-pandemic time. Gradual, calibrated withdrawl of liquidity over multi-year time frame, in a non-disruptive manner beginning this year. Will deploy various instruments as warranted to help the government complete its FY23 market borrowing programme. RBI expects CAD to stay at sustainable levels which can be financed with normal capital flows. Remain committed to maintaining orderly conditions in domestic financial markets:
RBI Governor Shaktikanta Das
