RBI Monetary Policy Highlights | In line with expectations, the RBI's Monetary Policy Committee (MPC) kept key interest rates unchanged on February 10 and retained the accommodative stance in its first policy meeting after Union Budget 2022. This is the tenth time in a row that the MPC headed by RBI Governor Shaktikanta Das has maintained the status quo.
The three-day RBI MPC meeting that began on February 8, concluded today on February 10. The process was held back by a day after Maharashtra declared a day of mourning on February 6 following the death of legendary singer Lata Mangeshkar.
The last MPC held in December 2021 had kept the benchmark interest rate unchanged at 4 percent and decided to continue with its accommodative stance against the backdrop of concerns over the emergence of the new coronavirus variant Omicron. It was then the ninth time in a row that the rate setting panel had maintained the status quo.
Here are the key takeaways of RBI Governor Shaktikanta Das' speech:
-- The MPC has kept both the repo rate and reverse repo rate unchanged at 4 percent and 3.35 percent respectively. Also, the panel continued with the so-called ‘accommodative’ stance in the backdrop of elevated level of inflation.
-- The RBI projected GDP growth for FY23 at 7.8 percent. Real GDP growth of 9.2 percent in FY22 will take economy above pre-pandemic level, Das said.
-- CPI inflation forecast for FY22 has been retained at 5.3 percent. It expected to moderate closer to 4.00 percent target in second half of FY23 and provide room for monetary policy to remain accommodative.
-- There has been some loss of momentum in the economic activity due to Omicron. Considering the outlook for inflation and growth, uncertainty related to global spillovers and Omicron, there's a need for continued policy support is warranted for the economy.
-- Rupee has shown resilience in the face of global spillovers. Current account deficit seen below 2 percent of FY22 GDP.RBI is committed to smooth conduct of the government borrowing program.
-- The cap of e-vouchers has been proposed to be increased from Rs 10,000 to Rs 1 lakh.
-- Variable rate repo operations of varying tenors will henceforth be conducted as and when warranted. Second, variable rate repos and variable rate reverse repos of 14-day tenors will operate as the main liquidity management tool. Third, these operations will be aided by fine turning operations. Fourth, with effect from March 1, the fixed rate reverse repo and Marginal Standing Facility will only be available from 5:30-11:59PM on all days.
The bi-monthly policy comes against the backdrop of the Budget wherein a nominal gross GDP of 11.1 percent has been estimated for 2022-23. The government expects this growth to be fuelled by a massive capital spending programme outlined in the Budget with a view to crowd-in private investment by reinvigorating economic activities and creating demand.
Finance Minister Nirmala Sitharaman raised capital expenditure (capex) by 35.4 percent for the financial year 2022-23 to Rs 7.5 lakh crore to continue the public investment-led recovery of the pandemic-battered economy. The capex in the current financial year is pegged at Rs 5.5 lakh crore. The spending on building multimodal logistics parks, metro systems, highways, and trains is expected to create demand for the private sector as all the projects are to be implemented through contractors.
With regard to borrowing, the government plans to borrow a record Rs 11.6 lakh crore from the market in 2022-23 to meet its expenditure requirement to prop up the economy. This is nearly Rs 2 lakh crore higher than the current year's Budget estimate of Rs 9.7 lakh crore. Even the gross borrowing for the next financial year will be the highest-ever at Rs 14,95,000 crore as against Rs 12,05,500 crore in the Budget Estimate (BE) for 2021-22.
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Monetary Policy | RBI continues its flexible approach
Between a fixed rate policy signal (or a reverse repo rate hike) and variable reverse repos, the MPC has opted for the latter to retain its flexibility to tweak short-term rates... Read More
RBI Monetary Policy LIVE Updates: RBI has provided market with 'very dovish policy': Yes Bank Chief Economist Indranil Pan
"The RBI has provided the market with a very dovish policy –more so than expected by market. Growth concerns continue to play a bigger role than inflation for RBI. In terms of its forecasts on inflation, RBI indicates a glide path for inflation going down to the 4% handle in Q3 and Q4 FY23. While the RBI contends that the growth momentum remains positive, the stance however indicates that the RBI is willing to wait longer to see the growth becoming durable and sustainable," Yes Bank Chief Economist Indranil Pan said.
"For now, the RBI has decoupled itself with the monetary policy momentum in the rest of the world, where higher inflation prints are leading to central banks of the developed economies to tighten rates. We believe that RBI may be able to hold back repo rate increases for longer and may not have any compulsion to follow global central banks unless their actions have any severe implication on the USD/INR rates. We foresee 2 repo rate increases in FY23 but predicting a timeline is difficult at this point," Pan added.
RBI Monetary Policy LIVE Updates: Unchanged policy rates will continue to invoke a sense of optimism: LIC Housung Finance MD Y V Gowd
“As the housing sales across major cities are at an all-time high, the unchanged policy rates will continue to invoke a sense of optimism for home and property buyers. The policy rates have remained unchanged for the 10th time in a row, and we expect the low home loan interest rate regime to continue for some more time. All this augurs well for the sector and will boost sentiments further," said Y Viswanatha Gowd, MD & CEO of LIC Housing Finance.
RBI Monetary Policy LIVE Updates: Expect today’s policy action to continue benefiting interest rate sensitive sectors: Axis Securities' Chief Investment Officer Naveen Kulkarni
"The markets cheered RBI’s first monetary policy for the calendar year 2022 as it kept key policy rates unchanged and continued with its accommodative stance. RBI’s continuation of policy support is decoupled from the global central banks, which are adopting policy normalization, citing heightened inflationary pressure. RBI, on the other hand, expects inflation to peak out soon, forecasting lower inflation for FY23 at 4.5% from 5% earlier. GDP growth at 7.8% for FY23 looks in-line, but lower growth rates (in the range of 4.3%-4.5%) for H2FY23 will be keenly watched. RBI’s priority on the growth front is not unwarranted given that on-ground economic recovery has yet to gather momentum and private consumption lags pre-pandemic levels. We believe over the medium term, policy rates are likely to gradually harden, and markets will continue to gauge impact from global policy changes," Axis Securities' Chief Investment Officer Naveen Kulkarni said.
"We expect today’s policy action to continue benefiting interest rate sensitive sectors such as housing, real estate, banking and is positive for stocks such as HDFC, CanFin, Kotak Mahindra, and SBI," Kulkarni added.
RBI Monetary Policy LIVE Updates: 'Sensible to persist with the accommodative stance', says ICICI Securities' Chief Economist Prasenjit K Basu
"Given global headwinds and the prospect of a gradual moderation of India’s CPI inflation, it is eminently sensible to persist with the accommodative stance. A key reason to keep the policy interest rate at historic lows longer is to spur a more durable rebound in private consumption. India did not massively boost monetary growth during the worst phase of the pandemic (as the US Fed, ECB and BoE did), so there is less need for the RBI to roll back monetary accommodation this year," Basu said.
"As the strong rabi crop boosts food supply in April-June, and other supply disruptions from the Third Wave of the pandemic recede, India’s CPI inflation will moderate, allowing policy rates to remain low for longer than in the developed world. That will provide a boost to equity valuations, and help spur a broad-based recovery in consumption and investment," the economist added.
RBI Monetary Policy LIVE Updates: Rajni Thakur, Chief Economist, RBL Bank:
"With continued accommodative stance and putting any rate action on hold, RBI is walking the talk of its 'durable growth' focus. Growth projections for the next fiscal year at 7.8% reflects our concern on demand uncertainties in the second half while inflation projections at 4.5% for 2022-23 is lower than our expectations. Though high oil prices and supply issues were mentioned as risk elements, MPC’s inflation trajectory trends lower in H1 FY23 thereby ‘providing room to remain accommodative."
"Since the large government borrowing programme for the next year that has been pushing up the bond yields doesn’t find a mention yet, it’s likely that RBI is trying to buy time and focus on managing rates expectations for the remaining two months of current fiscal year for now. The signalling is quite clear in this meeting that despite global rates inching up and upwards risks on inflation levels, RBI will tilt towards dragging its feet on rates normalisation well into the next fiscal year as well while continuing with its liquidity management steps."
RBI Monetary Policy LIVE Updates: Rahul Bajoria, Managing Director & Chief India Economist, Barclays
The RBI once again pushed back against expectations of normalisation, keeping all rates unchanged, despite expectations of a small hike in the reverse repo rate. Given the bank’s clear reluctance to pull back policy support, we push back our rate hike forecasts to Q3 2022.
The Reserve Bank of India’s monetary policy committee voted unanimously to keep the repo rate on hold, as well as leaving the policy rate corridor unchanged by holding the reverse repo rate steady. The MPC once again voted to maintain its accommodative stance until the growth recovery is sustained. While Dr. Jayanth Varma voted to leave the repo rate unchanged, he again expressed reservations about maintaining the accommodative stance.
Today’s messaging and lack of policy action indicate that market expectations of policy normalisation are out of sync with the RBI’s thinking. We think the RBI remains guided by growth considerations: the bank’s FY20 forecasts of GDP growth of 7.8% in FY23 and inflation falling to 4.5% are in line with our forecasts.
While the bank flagged risks to inflation from supply bottlenecks and high imported price pressures, it still noted that demand-side price pressures are benign, and headline inflation is likely to trend lower over the coming months. We think such dovish messaging on inflation makes it difficult to envisage the RBI hiking rates in the near term. While the RBI may choose to normalise the policy corridor over the next six months, we now expect repo rate hikes to only begin from Q3 2022 (ie, the August meeting), with risks of further delays. We still expect policy rate hikes of 50bp, which would push the repo rate to 4.5% by end-2022, with the reverse repo rate likely rising to 4.25% by that time.
The RBI also flagged its desire to rebalance liquidity levels, indicating that it is taking a flexible approach to this area. The bank said that the level of daily absorptions of liquidity under these programs has risen materially, and noted that the effective reverse repo rate has risen from 3.37% in August 2021 to 3.87% presently, on a weighted average cost basis. The RBI also has decided to introduce variable rate repo operations (VRRs) and variable rate reverse repo operations (VRRRs) to manage unexpected liquidity shortages or gluts. Further, the RBI has shrunk the window through which fixed rate repo tools could be used. At the same time, the governor emphasised that the RBI will continue to ensure that government borrowings evolve smoothly, and emphasised the bank’s commitment to manage responsibly an orderly evolution of the yield curve in a cooperative manner with financial markets.
We see these liquidity actions by the RBI as signaling its desire to reduce its hand holding of markets for managing liquidity, and leave institutions to more actively manage their own liquidity requirements
RBI Monetary Policy LIVE Updates: Rajiv Sabharwal, MD & CEO, Tata Capital
• Contrary to market expectations RBI continues to maintain its rate status quo and accommodative policy stance as well. This will accelerate the growth momentum in the economy. Further, RBI has taken cognizance of the measures taken by the global central banks with respect to tightening of interest rates but remains committed to support sustained economic activity.
• The recent spike in crude oil prices and the spill over effect on the inflation trajectory is being monitored closely by the RBI. The softening in food inflation and strong agricultural output will help manage inflation within the comfort corridor of the RBI
• RBI continues to offer assurance to the markets that there will be a rebalance in the overall systemic liquidity on a dynamic basis and aims for a smooth evolution of the yield curve. The bonds market should draw comfort from this measure and alleviate any price volatility concerns.
RBI Monetary Policy LIVE Updates: Dhiraj Relli, MD & CEO, HDFC Securities
“The MPC of the RBI decided to keep key rates unchanged at its meet on Feb 08-10 and maintained accommodative policy stance. The outcome was more dovish than most economists expected. Though the intent of the RBI to support the recovery in economy in the face of disruption due to Omicron variant is commendable, economists will now fear whether the RBI will fall behind the curve, having maintained the easy monetary stance longer than most other Central Banks had. The RBI has projected 4.5% CPI in FY23 (vs 5.3% for FY22), with CPI expected to fall sustainably below 5% in Q3FY23. One hopes that the inflation trajectory will soon come under control and the bet of the RBI pays off. Quarterly GDP growth projections remain volatile due to base effect with 4.5% growth projected for Q4FY23 compared to 7.8% for the whole of FY23. Equity markets may temporarily welcome this decision but will be largely driven by the balance Q3 Corporate results, outcome of state elections and changes in global risk appetite.”
RBI Monetary Policy LIVE Updates: Siddhartha Sanyal, Chief Economist and Head of Research, Bandhan Bank
The RBI was emphatic in conveying their commitment to support recovery in economic activities. While uncertainty about the inflation trajectory in the coming months cannot be ignored, the central bank seems clear in favour of following an extremely calibrated and nuanced pace of normalization of monetary policy and withdrawing the crisis time support, even if that means erring on the side of caution.
The RBI was more proactive in providing large quantum of liquidity to support the economy during 2020 and 2021 rather than cutting rates aggressively. Thus, it is not surprising that the central bank is now prioritizing unwinding of surplus liquidity over rate action.
Bond yields witnessed a knee-jerk uptick following the larger-than-expected government borrowing in the Union Budget. Today’s MPC announcement of status quo on the reverse repo rate will likely provide a cushion to yields and help it stay closer to the pre-budget levels in the coming weeks.
RBI Monetary Policy LIVE Updates: Amit Tripathi, CIO - Fixed Income Investments, Nippon India Mutual Fund - Last Dove Standing
"RBI is not one of the central banks which gets impacted by google hits for keywords such as “Inflation”. Today’s policy surprise was not the “no hike” in reverse repo (RR) decision. As RBI stated, effective RR rate is already above 3.85%. The big surprise is the extremely dovish inflation guidance, which many would suggest may be somewhat of a gamble purely basis visible data. Essentially if these projections hold, a big “if”, we can almost forget sharp repo rate hikes in FY 23. The curve will continue to remain steep barring the very short end (upto 1 year), which has already repriced in line with the change in effective RR move. The longer end (beyond 5 years), will continue to oscillate basis demand supply dynamics on one hand, and inflation expectations on the other. The risk is a large deviation in actual vs projected inflation for FY 23. The other risk is in the external sector, if CAD continues to widen through FY23. For now, the markets are adequately priced almost across the curve, and barring large negative events, may not see too much pressure near term. Further the carry improvements in the last 3 months have made short to intermediate duration funds already more attractive from a risk return perspective."
RBI Monetary Policy LIVE Updates: Amar Ambani, Senior President and Head – Institutional Equities, Yes Securities
“RBI delivered an ultra-dovish policy by maintaining a status quo on the policy rates and the stance. The status quo has triggered strong rally in sovereign bonds, with benchmarks yields retreating from the recent highs. It clearly conveys that RBI is quite committed to orderly evolution of yields, notwithstanding the headwinds in the form of inflationary pressure, hawkish Fed and a large Indian government borrowing plan for FY23. Its stance is backed by its expectation of easing of price pressures by end of the fourth quarter of FY22. This dovish policy is in line with our view that RBI will support growth and not turn hawkish for as long as it can, considering that the US Fed is looking to taper and raise its rates.”
RBI Monetary Policy LIVE Updates: Dharmakirti Joshi, Chief Economist, CRISIL - Lending traction by standing pat
“The Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) kept policy rates unchanged, with repo rate at 4%, reverse repo rate at 3.35%, and marginal standing facility at 4.25%.
The rates remain unchanged since the pandemic began, and are the lowest in a decade.
The focus of the RBI continues to be on supporting India’s GDP growth, which is expected to be a mere 1.3% above the pre-pandemic level this fiscal, according to the first advance estimates by National Statistical Office. The MPC showed concern about the recent softening in economic activity, and remains wary of the risks posed by successive Covid-19 waves.
Clearly, Mint Road believes it has space to support growth, given that headline CPI inflation remains within its target of 2-6%, and is projected to dip to 4.5% next fiscal.
Exogenous risks have increased since the last monetary policy review meeting. Brent crude prices have jumped from $74.3 per barrel on average in December 2021 to over ~$90 now .
CRISIL Research expects Brent to average $80-85 in 2022, the highest since 2015. High crude oil prices adversely affect Indian macros such as the current account deficit, inflation, GDP growth, and in some cases, the fiscal deficit.
In the past, the RBI had raised policy rates during periods of rising crude oil prices, such as in 2010 (150 bps cumulative hike in repo rate), 2011 (225 bps), and 2018 (50 bps).
During his post-meeting speech, the RBI governor highlighted significant risks prevailing on account of crude oil prices. However, for inflation, the impact on inflation is expected to partially offset by lower excise duties on fuel relative to last year. The central bank remains concerned about the downside risks posed to GDP growth.
Secondly, the US Federal Reserve is expected to raise its policy rate at the fastest pace since the Global Financial Crisis.
S&P Global expects six hikes in 2022 itself (starting March), followed by five more in the next two years. The projected number of hikes in 2022 are much more than seen at the peak of the Fed tightening after the Global Financial Crisis (four rate hikes in 2018).
That peak had coincided with repo rate hikes by the RBI. However, for now, Mint Road has chosen to manage external risks by gradually withdrawing excess liquidity, and having a dynamic approach by restoring the liquidity management framework of February 2020. It derives comfort from the resilience of the rupee despite tightening global financial conditions.
Through today’s policy, the RBI showed domestic factors remain its primary concern, and that it can chart a different policy trajectory relative to other advanced economies such as US. However, we believe domestic inflation, too, could face upside risks from surging crude oil prices. In addition, firms can increase pass-through of cost pressures to consumers as demand strengthens over the coming year.
Thus, we expect the RBI to start normalising its policy rates by April. We expect three hikes in repo rate by 25 basis points each, bringing it to 4.75% by the end of fiscal 2023. That will still be lower than 5.15% seen just before the pandemic (i.e., in February 2020).”
RBI Monetary Policy LIVE Updates: Bond yields decline 8 basis points as RBI stand looks more dovish than expected
The government 10-year bond yields fell nearly 8 basis points on Thursday as analysts viewed the Reserve Bank of India’s policy tone was more dovish than expected. The 10-year bond yield fells 8 basis points to 6.72 percent from its previous close of 6.8 percent. Bond yields and prices move in opposite directions.
The monetary policy committee (MPC) has kept both the repo rate and reverse repo rate unchanged at 4 percent and 3.35 percent. Also, the panel continued with the so-called ‘accommodative’ stance against the backdrop of elevated levels of inflation.
“The tone of the policy review appeared sanguine on domestic inflation and cautious on growth, with a view to not sacrificing the latter in a futile attempt to control imported inflation... With the tone being more dovish than expected leading to a back-ending of rate hike expectations, and the comeback of the reference to an orderly evolution of the yield curve, the 10-year G-sec yield cooled back to pre-Budget levels,” said Icra chief economist Aditi Nayar. Read full here.
RBI Monetary Policy LIVE Updates: Bet on these 10 rate-sensitive stocks for up to 15% return
The Reserve Bank of India’s Monetary Policy Committee unanimously decided on February 10 to keep the repo and reverse repo rates unchanged and continue with its accommodative stance and vote for growth, expecting inflation to peak in the current quarter.
The dovish move was against the expectations of most experts who had predicted an increase in the reverse repo rate, in tandem with hawkish global central banks amid rising prices, including that of crude oil.
RBI governor Shaktikanta Das said continued policy support is warranted for a durable and broad-based recovery and efforts will be made to limit disruption to economic activity.
The stock markets reacted positively, with the BSE Sensex rising 386 points to 58,852 and the Nifty 50 climbing 113 points to 17,577 at 11:20 hours IST, continuing an uptrend for the third consecutive session. The Nifty bank, financial services, realty and metal indices gained more than 1 percent each.
Here is a list of rate-sensitive stocks that experts say can return between 4 and 15 percent over the next 3-4 weeks. Returns are calculated based on February 9 closing prices.
RBI Monetary Policy LIVE Updates: NAREDCO Pune
-- Dr. Atul Goel, MD, Goel Ganga Group & President (Elect.), NAREDCO Pune
The RBI objective must be attached to the growth as the past two years were significantly stressful for the country. The RBI policy review might be raising the reverse repo rate as per the suggestions of monetary policy committee, however the important part is to keep the price variation within check for the consumers. The expectation are around 15 to 20 basis points. But overall it would be the RBI way of handling the inflation limits is to be seen rather than the actual conditions prevailing in the country.
-- Siddharth Maurya, Market Expert (Real estate and fund management)
RBI has maintained an accommodative stance and kept the repo rates unchanged. However, as inflation is under control, RBI could have thought to lower the rates by 25 to 50 basis points. In the last 2 years, RBI has been maintaining an accommodative stance and slashed rates, which has been instrumental in setting the stage for higher economic growth. RBI should take a cue from the past actions and continue with further measures to support spending and spurred growth.
-- Ridhima Kansal, Director, Rosemoore
The RBI's decision to maintain repo and reverse repo rates at current levels indicates their growth-oriented stance. While inflation continues to be on the higher side and the Indian economy has caught up on an upward growth trajectory after the pandemic-driven crisis, such an outlook by RBI indicates their positive and healthy outlook on the immediate future of the country's economy. No wonder, the resilience of the common man has helped and the central bank seconds it with its positive outlook reflected in the status quo of the monetary policy.
RBI Monetary Policy LIVE Updates: Experts hail continued accommodative stance as pro-growth
The RBI’s Monetary Policy Committee (MPC) continued with its accommodative stance and kept the key interest rates unchanged on February 10, a decision cheered by the market and hailed as pro-growth by experts.
Both the repo rate and reverse repo rate were kept steady at 4 percent and 3.35 percent as the panel continued with the so-called accommodative stance in the backdrop of an elevated level of inflation.
“The possible hike in fixed reverse repo was a close call and it seems the RBI gauged that markets need to be assuaged over material tightening of financial conditions ahead as global dynamics change and decided to stay put,” said Madhavi Arora, Lead Economist, Emkay Global Financial Services.
Prior to the meeting, economists had projected the central bank to raise the reverse repo rate, while market participants expect the central bank to raise interest rates by 75-100 basis points in 2022-23.
The RBI projected GDP growth for FY23 at 7.8 percent and retained the projection for current financial year at 9.2 percent. Read full here.
Market LIVE Updates: Nifty around 17,600, Sensex gains led by power, metal, financials
Benchmark indices were trading higher with Nifty above 17600 led by the metal, power realty and banking names. The Sensex was up 517.58 points or 0.89% at 58983.55, and the Nifty was up 154.10 points or 0.88% at 17617.90. About 1512 shares have advanced, 1567 shares declined, and 100 shares are unchanged. Among sectors, power, metal, bank up 1 percent each. BSE midcap and smallcap indices are trading flat. Follow our MARKET LIVE Blog here
RBI Monetary Policy LIVE Updates: Decision reveals low confidence on growth (PRO)
RBI’s role as debt manager to the government could have weighed on the decision... Read More
RBI Monetary Policy LIVE Updates: Nitin Shanbhag, Executive Group Vice President – Investment Products, Motilal Oswal Private Wealth
“Policy rates remaining unchanged indicates that RBI is more focused on domestic macro variables rather than tracking global central bank actions. While the US Fed has clearly indicated multiple rate hikes going forward to combat rising inflation, the RBI seems far more calibrated in approach given its own projection of domestic CPI peaking in Q4FY22 and moderating in FY23. On the external front, the projection of CAD at 2% of GDP is also positive. Although bond yields will take a breather for now, with the RBI continuing on the path to normalization, we maintain that the yield curve is likely to flatten going forward. Hence, for core fixed income allocation, a barbell approach i.e. having core allocation to high quality accrual oriented funds with short maturities (3-5 years), complemented by 20-30% allocation towards long maturity and high quality roll down strategies, would remain the preferred strategy.”
RBI Monetary Policy LIVE Updates: Aditi Nayar, Chief Economist, ICRA
“As we had expected, the MPC and RBI maintained a full status quo, on the stance, repo rate and reverse repo rate, with no change in the voting patterns of the six members. The tone of the policy review appeared sanguine on domestic inflation and cautious on growth, with a view to not sacrificing the latter in a futile attempt to control imported inflation.
With the Governor dousing fears of premature tightening and no additional MPC member voting for a stance change, a shift to a neutral stance in April 2022 appears to be ruled out, unless the CPI inflation exceeds the upper threshold of 6.0% in both January and February 2022.
The MPC's forecast of a 4.3-4.5% GDP growth in H2 FY2023 belies conviction in a back-ended pickup in growth driven by Government and private capex.
With the tone being more dovish than expected leading to a back-ending of rate hike expectations, and the comeback of the reference to an orderly evolution of the yield curve, the 10-year G-sec yield cooled back to pre-budget levels. We continue to expect the 10-year yield to cross 7.0% in April 2022, once the FY2023 borrowing programme kicks off. However, it is likely to climb more slowly thereafter, given the postponement in the likely timing of the first repo rate hike to August 2022 or later, from our earlier expectation of June 2022.”
RBI Monetary Policy LIVE Updates: Realty stocks rally on rates status quo
Realty stocks gained, pushing the Nifty realty index up 1.5 percent, on February 10 after the Reserve Bank of India left key rates unchanged, a clear indication that home loans won’t get expensive in a positive sign for homebuyers and the real estate sector. Macrotech Developers, Indiabulls Real Estate, and Godrej Properties rallied more than 2 percent each. Brigade Enterprises, Sobha, Sunteck Realty, and DLF gained 1-1.75 percent.
"This is a piece of positive news for the real-estate companies as there will not going to be any hike in home loan rates. Currently, home loan rates are between 6.5 percent and 7 percent, this is one of the lowest home loan rates in history," said Yash Gupta-Equity Research Analyst at Angel One.
The low-interest-rate environment has been one of the supporting factors for the real estate segment. The Nifty realty index has gained nearly 200 percent in the last 20 months.
The RBI’s monetary policy committee retained repo rate, or the lending rate, at 4 percent and reverse repo rate, the borrowing rate, at 3.35 percent against Street expectations of a hike in reverse repo rate. Read full here.
RBI Monetary Policy LIVE Updates: Lakshmi Iyer, CIO (Debt) & Head - Products, Kotak Mahindra Asset Management Company
“The perfect V-day gift to bond markets was delivered on P-day today. No change in rates or stance is a big boost to sagging bond prices and a much needed respite. No major worries on inflation front as well. Fy 23 inflation forecasts at 4.5% also seems absolutely fine for yield. This coupled with the current liquidity situation calls for anchoring of bond yields and expect positive sentiment to revive in bond markets in near term.”
RBI Monetary Policy LIVE Updates:
Digital rupee will be exactly like normal, physical rupee. It will be 1-to-1 convertible. Only it will be digital in nature. Like normal rupee is kept in your purse or pocket, the digital rupee will be kept in your cell phone device. The difference between digital rupee and private cryptocurrencies is that the digital rupee will be issued by the RBI:
RBI Deputy Governor T. Rabi SankarRBI Monetary Policy LIVE Updates: Bank, NBFC shares rally as RBI surprises with a dovish monetary policy
The central bank’s projection of a decline in inflation in the second half of the next financial year towards its medium target of 4 percent and its insistence on keeping monetary policy accommodative for “as long as necessary” for a durable economic growth led to a sharp rally in government bond prices.
The yields on the benchmark 10-year bond - the 6.54 percent 2032 government bond - has dropped to 6.72 percent from 6.80 percent.
The decline in government bond yields or the rise in bond prices is positive for banks as it lowers the mark-to-market losses they have seen in the March quarter so far. State-owned bank stocks, in particular, had come under pressure earlier this month as government bond prices fell following a higher-than-expected fiscal deficit target set by the government for 2022-23. Read full here.
RBI Monetary Policy LIVE Updates:
As far as cryptocurrencies is concerned, the RBI stance is very clear. Private cryptocurrencies are a big threat to our financial and macroeconomic stability. They will undermine RBI's ability to deal with issues related financial stability.
I think it is my duty to tell investors that what they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk. They should keep in mind that these cryptocurrencies have no underlying (asset). Not even a tulip!: RBI Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates:
Monetary policy in India was already accommodative before the pandemic. That itself was followed by a pandemic response. At the current time, we are still involved in mitigating the impact of the pandemic. But our underlying concern and objective is to put growth on a strong and self-sustaining path: RBI Deputy Governor Michael Patra
RBI Monetary Policy LIVE Updates:
I won't spell out a particular level for government bond yields. But our actions will show what yield level we are comfortable with.
One must keep in mind that NHAI is not borrowing from market in FY23, as per Budget. The government will support it with around Rs 65,000 crores... Further, I have heard that small savings collections can be higher. These factors should be kept in mind when talk of the government's market borrowing. But let next financial year come first: Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates:
Work on both wholesale and retail models of CBDC is ongoing. Which model is tested first will be decided later.
We are not working with any external agencies when it comes to the CBDC. We are working with the CBDCs in our eco-system. Any decision to engage with any other agencies will be taken later.
We are open to trying out all possible technologies for CBDC. It depends on the use case. So it won't be one or the other.
Digital rupee will be exactly like normal, physical rupee, but be digital: RBI Deputy Governor T. Rabi Sankar
RBI Monetary Policy LIVE Updates: On Central Bank Digital Currency
-- We can't give a timeline on CBDC. But what I can say is that whatever we are doing, we are doing it very carefully and cautiously. We have to keep risks like cyber-security and counterfeiting in mind. So we are proceeding cautiously and can't give a timeline: Governor Shaktikanta Das
-- Work on Central Bank Digital Currency is ongoing. Once the law, as proposed, is amended, we can go ahead with our proofs of concept and pilot projects: RBI Deputy Governor T. Rabi Sankar
RBI Monetary Policy LIVE Updates: RBI Deputy Governor Michael Patra
-- The character of inflation is very different in the United States than ours... There is a material difference in the way in which our inflation is evolving
-- At the current time, the repo and reverse repo rates reflect our stance. What we do going forward will be a calibrated and well-telegraphed approach.
-- We expect a smooth re-balancing of liquidity conditions. Our actions have been very seamless and not caused any volatility. So I do not see any undue volatility in money markets
RBI Monetary Policy LIVE Updates:
We have stated very clearly that we are very much in sync with the evolving conditions. Our policy is driven by the evolving domestic inflation and growth scenarios... So, in our assessment, we are not behind the curve. Global central banks are following a different path.
We have constant interactions with the bond market. Whether they have an inherent reluctance (to bid at weekly G-Sec auctions), you have to ask them... At least me and my colleagues have not seen any sign of "discomfort": Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates:
The way we handle the government borrowing, that reflects the RBI's approach. Now, the yield curve has gone up, yes. Perhaps, I don't know, the market was judging that the inflation trajectory would be much higher. But we have given our inflation trajectory today... The way we deal with G-Sec auctions, that reflects the thinking of the Reserve Bank:
Governor Shaktikanta DasRBI Monetary Policy LIVE Updates:
Inclusion in global bond indices can work in both ways. This is precisely the reason the RBI and the government is taking a very calibrated approach on this: Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates:
It is not a question of either fiscal or monetary policy. Fiscal action is calibrated. They (government) have expanded capital expenditure. I can see fiscal consolidation. They are on a particular roadmap. It is coordinated action between fiscal and monetary policy. It is not like we pass on the baton to another: Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates:
The inherent momentum of growth is positive. It is picking up. It (FY23 GDP growth forecast of 7.8 percent) is primarily due to the base effect: Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates:
Our inflation projections are benchmarked to international crude oil prices. We have examined various scenarios of where oil prices could be:
Governor Shaktikanta DasRBI Monetary Policy LIVE Updates:
The character of inflation is very different in the United States than ours... There is a material difference in the way in which our inflation is evolving: RBI Deputy Governor Michael Patra
RBI Monetary Policy LIVE Updates:
Repo and reverse repo ratesrates represent a particular stance. Reverse repo rate not changed as policy stance continues. At the current juncture, we have given our reasons for continuing with the accommodative stance. As the stance continues, we did not see reason to change the rates:
Governor Shaktikanta DasRBI Monetary Policy LIVE Updates: Samuel Joseph, DMD, IDBI Bank
“MPC has again surprised the pollsters. By leaving the rates unchanged and continuing the accommodative stance and more importantly the guidance for 2022-23 inflation at 4.5%, the policy is extremely positive for the markets. The divergent monetary policies across the globe could throw up surprises going forward, which could be tackled in the April policy”.
RBI Monetary Policy LIVE Upadates: Government can now extend benefits of up to Rs 1 lakh through e-RUPI vouchers
e-RUPI, a digital voucher launched in August 2021 for digital dissemination of benefits under government schemes, will now come with a cap of Rs 1 lakh. As a part of the monetary policy announcements on January 10, Reserve Bank of India (RBI) Governor Shaktikanta Das said that the cap on each voucher will be hiked by 10 times from Rs 10,000 to Rs 1 lakh for both state and central government issuances.
e-RUPI was developed by the National Payments Corporation of India (NPCI) which also handles payments instruments like the Unified Payments Interface (UPI), RuPay and Bharat Bill Payment System (BBPS). Launched by the Prime Minister in August last year, the e-RUPI's first use case was to provide free Covid-19 vaccination to Indians post the second wave in the country. Read more here
RBI Monetary Policy LIVE Updates: Shishir Baijal, Chairman & Managing Director, Knight Frank India
RBI continued Accommodative Stance to help economic growth:
“At this critical juncture when the economy is just recovering from the instability caused by the third wave of pandemic, RBI’s decision to keep the policy interest rate unchanged is a welcome move. There are still lingering growth concerns in the economy and RBI’s accommodative monetary policy stance will be supportive of growth. The Housing market has been showing a healthy bounce back from the covid crisis and low interest rates will help in improving affordability and sustaining the growth momentum. The sustenance of housing market recovery will have a strong multiplier effect on overall economic growth”
RBI Monetary Policy LIVE Updates: Keki Mistry, CEO, HDFC
RBI policy will help the industry grow. We believe home loan rates will remain broadly the same, probably at the bottom of the interest rate cycle. Don't see an upward revision in the near future.
The RBI's projections about inflation have been fairly accurate, but the big risk is global oil prices. The US Fed needs to act more aggressively than RBI. (CNBC-TV18)
RBI Monetary Policy LIVE Updates:
MPC member Jayanth Varma voted against ‘Accommodative’ stance (CNBC-TV18 Alert)
RBI Monetary Policy LIVE Updates: Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities
“The RBI remained dovish and continued to support growth as it kept policy rates and stance unchanged. We believe that it would have been opportune to start policy normalization with atleast a 20 bps hike in reverse repo without much of market impact. However, today’s policy risks sharper adjustments if inflation risks materialise. Inflation risks, especially from fuel prices, remains a concern and can materialize relatively soon. Compared to RBI estimates, we estimate FY2023 GDP growth 30 bps higher at 8.1% and FY2023 CPI inflation 50 bps higher at 5%. We believe it would be opportune to increase reverse repo rate hike by 40 bps in the April policy.”
