RBI Monetary Policy Highlights: The Monetary Policy Committee (MPC) has decided to maintain status quo and keep interest rates unchanged. Currently, the repo rate is 4 percent and reverse repo rate is 3.35 percent. Reserve Bank of India (RBI) Governor Shaktikanta Das said the policy stance continues to be "accommodative". The MPC has retained its GDP growth projection of 9.5 percent for FY22. The CPI inflation forecast for 2021-22 has been revised to 5.7 percent from 5.1 percent.
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RBI Policy: Status Quo, Low Interest Rates To Boost Growth, Say Corporates
The MPC kept the repo rate unchanged at 4 percent. As expected, the stance of the monetary policy panel has been retained as 'accommodative'.... Read More
RBI Monetary Policy LIVE Updates:
Here is what top analysts think of theRBI’s policy outcome.
RBI Monetary Policy LIVE Updates:
Radhika Rao, Economist at DBS GroupResearch:"The tone on growth expectations was positive but cautious, as the ebbing second wave allowed for phased reopening and improvement in domestic activity. Stronger consumption data outturns by way of high frequency indicators, viz., registration of automobiles, electricity consumption, non-oil non-gold imports, consumer durable sales, etc. were cited as leading to an optimistic view. However, investment growth was still seen as anemic, but policymakers drew confidence that improving business surveys and operational efficiencies pointed towards a positive outlook."
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RBI Monetary Policy LIVE Updates:
The RBI is closely watching the stressed assets situation in the banking sector, particularly in the retail and micro, small and medium enterprises segments (MSME), said MK Jain, one of the deputy governors at the Reserve Bank of India. However, there is no alarming situation at this point, said Jain.
There is some stress visible in the retail and MSME segments. "We are closely monitoring...there is stress but not alarming," said Jain
RBI Monetary Policy LIVE Updates:
RBI may come with some digital currency model in near future, says Deputy Governor
The RBIshould be able to come out with some model of digital currency in the near future and probably by the end of this year, said T Rabi Sankar, one of the deputy governors at the central bank.
The RBI is working on various aspects including the technology, distribution, and validation of this model Rabi Sankar said. In the past too, the RBI had spoken about its plans to introduce digital currency even as it has expressed concerns on the private virtual currencies.
RBI Monetary Policy LIVE Updates:
Sakshi Gupta, Senior Economist, Hdfc Bank, Gurugram: “The RBI revised its inflation forecasts upward to 5.7% recognising the recent inflation spikes. That said, the central bank continued to state that it views inflation as transitory and will look through it while prioritising growth.” “The increase in quantum of VRRR (variable reverse repo rate) absorption from the market over the next two months is likely to prevent distortions due to excess liquidity for short term rates. We could see some upward pressure on short term rates and the bottom for rates is likely over. The yield curve could see some flattening over the coming weeks.” “The broad-based increase in inflation over the last few months raises uncertainty around the transitory nature of the inflation trajectory and we expect prints to cross 6% once the base effect falls out in Q4 FY22.”
RBI Monetary Policy LIVE Updates:
Ravindra Sudhalkar, CEO at Reliance Home Finance:"The move by the Reserve Bank of India's Monetary Policy Committee to keep the repo rate unchanged at 4% was an expected move given the growth concerns hanging over the economy, especially from the impending third wave of the COVID19 pandemic. Even though inflation is high and a concern, any rate hike at this juncture would've been a deterrent to growth. Also, although the RBI maintained GDP growth forecast at 9.5% for FY22, Governor Shaktikanta Das has pointed out that the underlying conditions around aggregate demand are still weak."
RBI Monetary Policy LIVE Updates:
Kunal Kundu, India Economist, Societe Generale, Bengaluru: “Announcement of an unchanged policy rate, on expected lines, is not what the market participants were keeping an eye on. Who eventually gets the precedence in growth versus inflation trade-off is where the interest veered on.” “As of now, it seems growth has won the day with assertion of continuation of accommodative stance as long as necessary to support growth (with continued belief in transitoriness of inflation) with the central bank convinced that monetary policy can do all the heavy lifting to support growth without relevant fiscal intervention or even the lack of intention to cut taxes on petrol and diesel to keep a leash on inflation.” “For the time being, it seems the RBI is using the entire band of 2%-6% as target range (rather than the median of 4%) to continue to remain accommodative. Inflation may have peaked but with the RBI raising FY22 inflation forecast to 5.7% (quite in line with our expectation of 5.6%) from 5.1% earlier is clear indication of underlying price pressure that too needs to be addressed in order to prevent a potential stagflation situation going forward.”
RBI Monetary Policy LIVE Updates:
Mr. Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani:"The Consumer Price Index inflation rate of more than 6% for May-June was beyond the Reserve Bank of India’s (RBI’s) tolerance mark. The RBI’s accommodative monetary policy and unchanged low-interest rates could become a challenge for it if inflation spikes again. While the status quo maintained by the RBI is appreciated, the focus should be on boosting growth with the right fiscal measures and policy support. This is especially important at a time when the International Monetary Fund has cut India’s growth estimate from 12.5% in April to 9.5% in July.As the second wave of the COVID-19 pandemic comes to an end and supply chains show signs of recovery, the real estate industry is inching towards normalcy. We are hopeful that the RBI and the Central Government will make announcements that trigger demand and boost the residential market segment. Just like the fiscal measures adopted last year, we are keen to see steps that enhance the market’s momentum and spur greater economic growth."
RBI Monetary Policy LIVE Updates:
Vikash Khandelwal, CEO, Eqaro Guarantees on RBI policyThe RBI has been doing the heavy lifting to bring back the economy on track since the pandemic struck last year. It has announced more than 100 measures to support growth. The move to extend TLTRO till December will further aid growth. Over the high-frequency indicators, normal monsoon, and steady pace of vaccination indicates the RBI estimate of 9.5% growth for FY22 is achievable.The decision by the RBI to keep key rates and the unchanged 'Accomodative' policy stance was on expected lines. Easy liquidity will help businesses, especially the MSMEs at a time when demand is recovering. The governor has allayed concerns on inflation as well.
RBI Monetary Policy LIVE Updates:
Mr. D.R.E Reddy, CEO and Managing Partner, CRCL LLP:The status quo retained by the RBI signals a desire to continue stimulating growth. However, with the indicators of inflation now beginning to come through, how long this stance can be maintained is something that will need to be watched. The good thing is that the RBI continues to tilt in favour of growth versus inflation, some of which might be good for the economy. It also hints at a possibility of looking at a more accommodative stance in the longer term so that the economic recovery can be sustained.Given the demand for metals globally, there is a possibility that some of the short-term inflationary risks can be mitigated by higher inflows of foreign exchange through exports so that the fiscal deficit is suitably managed and this needed too much pressure on the currency on account of inflation.
RBI Monetary Policy LIVE Updates:
Vivek Kumar, Economist, Quanteco Research, Mumbai: “The overall stance continues to remain accommodative, with continued emphasis on nurturing growth impulses while also mitigating downside economic risks from the spread of COVID-19.”“However, basis the upward revision in average FY22 CPI inflation forecast to 5.7% from 5.1% and expecting GDP growth recovery to remain intact (with unchanged FY22 forecast of 9.5%), the RBI took calibrated action to modulate liquidity conditions by increasing the size of the current VRRR auctions... This should nudge short-term money market rates to firmly above the Reverse Repo Rate.”“While this would be neutral for core liquidity in the system, it nevertheless portends the intention to gradually move towards monetary policy normalisation. We continue to expect the RBI to take rate action by restoring the width of the LAF corridor to 25 bps from 65 bps currently between December, 2021 and February 2022 by upward adjustment in RRR from 3.35% currently to 3.75%... followed by a 25 bps hike in the repo rate in April 2022.”
RBI Monetary Policy LIVE Updates:
Garima Kapoor, Economist - Institutional Equities, Elara Capital, Mumbai:“Amid fears regarding another wave of coronavirus and to sustain the incipient economic recovery, the RBI continued to prioritise growth despite inflation remaining sticky and closer to upper band of the target.While the RBI enhanced the quantum of VRRR rate auctions to suck out a part of ballooning systemic surplus liquidity, policy rate normalisation is still sometime away. We expect that the RBI will continue to maintain accommodative stance through this calendar year and embark a reverse repo rate hike in Q4FY22.”
RBI Monetary Policy LIVE Updates:
Prithviraj Srinivas, Chief Economist, Axis Capital: "The MPC has kept policy rates on hold as expected. The only major move was an increase in Variable Rate Reverse Repo (VRRR) limits which was widely expected. However, the governor was quick to point out that VRRR limit increase does not indicate a change in monetary policy stance. We expect the timing of first policy rate increase in the future to coincide with confidence that vaccinations provide adequate protection against a relapse."
RBI Monetary Policy LIVE Updates:
Suman Chowdhury, Chief Analytical Officer, Acuité Ratings: "As widely expected, MPC has continued with its accommodative stance without any alteration in the benchmark rates given the continuing uncertainty on the domestic growth trajectory and the persistent risks of a fresh wave of the Covid pandemic. While RBI maintained its GDP growth forecast at 9.5% for FY22, it is interesting to observe that the growth projections for the next few quarters in the current fiscal have been scaled down while enhancing the growth estimates for Q1FY22. This reflects the central bank’s concerns on the pace of consumption demand revival despite the expectations of a favorable Kharif crop, buoyant exports, steady progress in vaccination, and a conducive monetary and fiscal policy."
RBI Monetary Policy LIVE Updates:
Here is a list of rate-sensitive stocks that may be a good buy at current levels or on dips from a three-six months' perspective. Returns are calculated based on August 4 closing price.
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The MPC voted 5:1 to continue with the accomodative monetary policy stance.
"All members, namely, Dr. Shashanka Bhide, Dr. Ashima Goyal, Dr. Mridul K. Saggar, Dr. Michael Debabrata Patra and Shri Shaktikanta Das, except Prof. Jayanth R. Varma, voted to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward," the MPC said in its statement.
RBI Monetary Policy LIVE Updates:
Today, we are in a much better position than at the time of the MPC’s meeting in June 2021. As the second wave of the pandemic ebbs, containment eases and we slowly build back, vaccine manufacturing and administration are steadily rising. Yet the need of the hour is not to drop our guard and to remain vigilant against any possibility of a third wave, especially in the background of rising infections in certain parts of the country: Shaktikanta Das
RBI Monetary Policy LIVE Updates:
the MPC said "The growing consensus is that the recovery is occurring on a diverging two-track mode. Countries that are ahead in vaccination and have been able to provide or maintain policy stimulus are rebounding strongly. Growth in other economies remains subdued and vulnerable to new waves of infections. There has been a slowing of momentum in global trade volumes in Q2:2021, with elevated shipping charges and logistics costs posing headwinds."
RBI Monetary Policy LIVE Updates:
The MPC has pegged India's real GDP growth at 21.4 percent in Q1; 7.3 percent in Q2; 6.3 percent in Q3; and 6.1 percent in Q4 of 2021-22. Real GDP growth for Q1:2022-23 is projected at 17.2 percent.
RBI Monetary Policy LIVE Updates:
The MPC said, "The available data point to exogenous and largely temporary supply shocks driving the inflation process, validating the MPC’s decision to look through it. The supply-side drivers could be transitory while demand-pull pressures remain inert, given the slack in the economy. A pre-emptive monetary policy response at this stage may kill the nascent and hesitant recovery that is trying to secure a foothold in extremely difficult conditions."
RBI Monetary Policy LIVE Updates:
CPI inflation is now projected at 5.7 percent during 2021-22, higher than the previous forecast of 5.1 percent.CPI inflation is pegged at 5.9 per cent in Q2; 5.3 per cent in Q3; and 5.8 per cent in Q4 of 2021-22, with risks broadly balanced, the MPC said.CPI inflation for Q1:2022-23 is projected at 5.1 percent
RBI Monetary Policy LIVE Updates:
On-tap TLTRO scheme extended by 3 months; till December 31, 2021.
RBI Monetary Policy LIVE Updates:
The Reserve Bank of India (RBI)’s MPC kept the repo rate-- the key lending rate at which banks lend short-term rates to banks-- unchanged at 4 percent. The monetary policy stance has been retained at 'accommodative'. An accommodative stance means a rate hike is unlikely.
The MPC said it will continue with the accommodative stance as long as necessary to support a struggling economy hit by the COVID-19 pandemic. The announcement came in line with what most economists predicted in the backdrop of a persistently high retail inflation and uncertainty surrounding the growth.
RBI Monetary Policy LIVE Updates:
RBI to hold GSAP auctions on August 12 and August 26.G-SAP has been successful in anchoring yield expectation, Das said.
RBI Monetary Policy LIVE Updates:
CPI inflation is projected at 5.7 percent during FY22.
RBI Monetary Policy LIVE Updates:
The projection for India’s real Gross Domestic Product (GDP) is maintained at 9.5 percent for FY22.
RBI Monetary Policy LIVE Updates:
Economic activity has evolved broadly along expected lines. CPI inflation surprised on the upside in May; price momentum however moderated. High frequency food price indicators show some moderation in prices of edible oils and pulses in July. Outlook for aggregate demand is improving but underlying conditions are still weak. More needs to be done to restore supply-demand balance in no. of sectors: Shaktikanta Das
RBI Monetary Policy LIVE Updates:
Reverse repo rate remains at 3.35%, Marginal Standing Facility Rate andBank Rate at 4.25%. RBI Governor Shaktikanta Das said the policy stance continues to be "accomodative".
JUST IN: RBI maintains status quo; keeps repo rate unchanged at 4%
RBI Monetary Policy LIVE Updates:
Dinesh Unnikrishnan, Deputy Editor, Moneycontrol:
The Crypto Conundrum!
Of course, another important issue everyone wants to hear about from the central bank, apart from monetary policy itself, is any further clues on Cryptocurrency. While the RBI has clearly said it will bring out a central bank digital currency (CBDC) eventually, the signals from the RBI so far with respect to private virtual currencies is that of high caution. The Cryptocurrency Bill was supposed to happen in Parliament’s Monsoon session, but it didn’t for some reason. Will RBI Governor, Shaktikanta Das today touch up on the much hyped subject? Worth watching!
RBI Monetary Policy LIVE Updates:
Dinesh Unnikrishnan, Deputy Editor, Moneycontrol:
Another key question to be asked and an answer is awaited is whether the Governor’s statement will have any cues on policy normalization. Over the last one and half years, since the Covid onslaught happened, the RBI has unleashed liquidity in the financial system through various channels to make sure a tight liquidity situation doesn’t lead to panic. The measures have indeed helped to ensure calm in the markets and credit flow to critical sectors. But, at some point, the RBI will have to begin unwinding the easy money regime. Also, if the growth recovers and high inflation persists, rates need to harden, accommodative stance need to go. Is it time to start guiding the markets on policy normalization? Will we hear about it today? Fingers crossed!
Check the market reaction to the MPC announcement on our LIVE blog.
RBI Monetary Policy LIVE Updates:
Dinesh Unnikrishnan, Deputy Editor, Moneycontrol:
The choice before the MPC today is limited. Nothing has changed significantly from the last monetary policy review. Inflation remains high above the comfort zone of the MPC and growth cues remains weak ravaged by a devastating pandemic. At this juncture, the only logical outcome is to keep the rates steady and repeat the assurance to markets that RBI will continue on a growth supportive stance.
RBI Monetary Policy LIVE Updates:
RBI Governor Shaktikanta Das to make the monetary policy statement at 10 am
RBI Monetary Policy LIVE Updates:
While most analysts reckon the RBI won’t raise interest rates till next year, some expect the RBI to offer some clues as to when it will start reducing liquidity in a commentary that is released after the monetary policy committee (MPC) meeting.
All 61 economists polled by Reuters said they see no change in the repo rate which has been steady at 4 percentsince May last year. But the consensus expected the RBI to make two 25 basis point increases next fiscal year, taking the repo rate to 4.50% by end-March 2023. (Inputs from Reuters)
RBI Monetary Policy LIVE Updates:
Will MPC revise interest rates, inflation target?
It is extremely unlikely that the MPC will tinker with rates and move either way on the rate stance. The reason is simple: nothing has changed significantly since the last policy to warrant a change in the rate stance. The policy stance has been "accommodative" which essentially rules out a rate hike.
A majority of the economists Moneycontrol spoke to expect no change in rates or MPC's policy stance. High inflation and uncertain growth scenario will likely force the policymakers to continue on a wait-and-watch mode for more cues, they said.
RBI Monetary Policy LIVE Updates:
It is widely expected that the Monetary Policy Committee (MPC) will maintain status quo and keep the key interest rates steady. Currently, the repo rate is 4 percent and reverse repo rate is 3.35 percent.
The monetary policy announcement comes as the economy is recovering after the harsh second wave of COVID-19.
The MPC had last changed the repo rate in May 2020. It has cut the repo rateby 250 bps since February 2019.
Good morning.Welcome to Moneycontrol's LIVE coverage of the Reserve Bank of India's monetary policy announcement. The Monetary Policy Committee (MPC) will release its statement on key interest rates.
Stay tuned to this LIVE blog for the latest updates.
