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June 06, 2018 / 06:12 PM IST

RBI Policy Highlights: Bank deposit rates, home loan interest rate may see rise in tranches

Repo rate was hiked by 25 basis points to 6.25 percent while reverse repo has been revised to 6 percent

  • RBI Policy Highlights: Bank deposit rates, home loan interest rate may see rise in tranches
    Another bone of contention between the RBI and the government has been the latter's suggestion to start a payments regulator outside the purview of the RBI. (Image: Reuters)
    Moneycontrol.com
  • June 06, 2018 / 02:45 PM IST

    KEY TAKEAWAYS FROM RBI MPC POLICY

    — The Reserve Bank of India hikes key lending rate or repo rate by 25bps to 6.25%

    — Reverse repo rate now stands at 6%; FY19 growth projection retained at 7.4 %

    — The central bank projects retail inflation at 4.8-4.9% for April-September, 4.7% in H2 FY18

    — It sees major upside risk to the inflation path as crude prices rose 12%

    — Says volatile crude oil prices adds uncertainty to its inflation outlook

    — RBI expects boost to investments from swift resolution under the Insolvency & Bankruptcy Code

    — Geo-political risks, financial market volatility, trade protectionism to impact domestic growth

    — Adherence to budgetary targets by the Centre and states will ease upside risks to the inflation outlook

    — All members of the monetary policy committee voted for a 0.25% rate hike

    — Next meeting of the Monetary Policy Committee on July 31 and August 1

  • June 06, 2018 / 05:30 PM IST

    Thanks for staying tuned with Moneycontrol's coverage on the second bi-monthly monetary policy. For more updates log on to Moneycontrol.com

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  • June 06, 2018 / 05:27 PM IST
  • June 06, 2018 / 05:23 PM IST

    Bank deposit rates, home loan interest rate may see rise in tranches

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  • June 06, 2018 / 05:20 PM IST

    Bekxy Kuriakose, Head-Fixed Income, Principal Mutual Fund said, "The release of policy has seen a negative impact on gilt prices with yields moving up 5-6 bps on the ten year benchmark gilt. However short term rates have moved down by 15-25 bps. We feel the fact that RBI has maintained the neutral stance implies RBI remains mindful of growth concerns and future policy remains data dependent and would keep all options available with RBI. During the remainder of FY19 there is a chance of further 25-50 bps hike if oil prices continue to rise and US treasury yields also rise to 3.25 percent levels and above. The progress of monsoons, MSP hikes, fiscal policy target maintenance would also be key."

  • June 06, 2018 / 05:14 PM IST

    Radhika Rao, India Economist, DBS Bank said that the minutes of the June meeting will be watched next to gauge the committee members’ views, backing their unanimous vote for a 25 bps hike.

    She said, "The move to maintain a neutral move, while hiking the rates, allows the central bank to be non-committal about the future course of action. We recall, the central bank had lowered rates in 2017, maintaining a neutral stance, thus leaving the room to move in either direction depending on the evolving risks to the price outlook. While this year’s rate-hiking cycle will be shallow, it is unlikely to be ‘one and done deal’. The authorities’ will be watchful of the inflationary impact of hardening inflationary expectations, consumption-focused policies e.g. including the minimum support prices, and fiscal slippage risks from any shortfall in privatisation receipts, downside in GST collections and need for fuel excise duty cuts; return in market volatility. Keeping these in view, we maintain our expectations of another rate hike in the August/ September meeting."

  • June 06, 2018 / 05:09 PM IST

    Kuntal Sur, Partner & Leader-Financial Risk and Regulation, PwC India said, "The RBI hiked key policy rates by 25 bps for the first time in more than four years indicating an end of easing cycle for the time being. The MPC has hiked rates keeping in mind the external factors weighing on the economy. Crude prices since the last monetary policy review have moved to $80 per barrel, from the RBI’s expectation of $65 per barrel. The rate hike is also important to stabilize a weak rupee. The policy statement further notes a pick-up in domestic investment in the last quarter, and the central bank expects it to continue. It is, hence, the right time to increase rates."

  • June 06, 2018 / 05:08 PM IST

    The MPC has revised upwards the estimates of agriculture and allied activities on the supply side supported by an all-time high production of food grains and horticulture during the year.

  • June 06, 2018 / 05:07 PM IST

    "RBI policy response of raising rates by 25 bps is dictated by robust consumption and improving capacity utilization. Cost push inflation is a clear risk going forward," said State Bank of India (SBI) Chairman Rajnish Kumar.

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  • June 06, 2018 / 04:56 PM IST

    Rana Kapoor, MD & CEO, YES Bank said, "RBI’s unanimously delivered 25 bps hike has been balanced with a neutral stance, reinforcing MPC’s alacrity to retain inflation within its 4 percent target amidst hitherto buildup in price pressures led by crude prices. The rate action comes at a time when economic recovery now appears to be on a firmer footing. This stance allows RBI the choice to act in accordance with evolving macro and financial conditions, in both global and domestic economy in the coming months. Amidst many moving parts, this will entail a careful balancing of global headwinds from elevated crude prices, geopolitical tensions, and domestic policies of MSPs, state pay commissions on growth-inflation dynamics.”

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