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September 30, 2022 / 02:19 PM IST

RBI Monetary Policy Highlights: Repo rate hiked by 50 bps to 5.9%, FY23 inflation projection retained at 6.7%

RBI Monetary Policy Highlights: This has taken the repo rate, at which the RBI lends short-term funds to banks, to 5.90 per cent – the highest level since April 2019 – from 5.40 per cent

The Reserve Bank of India (RBI) on September 30 announced a 50 basis points hike in the repo rate stepping up its fight against persistently high inflation.

Repo is the rate at which the central bank lends short-term funds to banks. One bps is one-hundredth of a percentage point. With the latest rate hike, the repo rate now stands at 5.9 per cent.

Announcing the policy decision, RBI Governor Shaktikanta Das highlighted the worry of the rate-setting panel on inflation and said the

central bank is watching the price situation closely

A 50 bps increase in the repo rate this week is the fourth consecutive one since May. This has taken the repo rate, at which the RBI lends short-term funds to banks, to 5.90 per cent – the highest level since April 2019 – from 5.40 per cent.

The Monetary Policy Committee (MPC) began its three-day meeting on September 28 and will announce the outcome on September 30.

The MPC has increased the policy repo rate by 140 basis points since May to quell inflationary pressure.  The consumer price index (CPI) based retail inflation, which had started showing signs of moderation since May, has again firmed up to seven per cent in August. The RBI takes into account retail inflation while framing its bi-monthly monetary policy.

  • RBI Monetary Policy Highlights: Repo rate hiked by 50 bps to 5.9%, FY23 inflation projection retained at 6.7%
    Moneycontrol.com
    HIGHLIGHTS
    • 01:54 PM IST

      India has got responses from 5 countries for rupee settlement mechanism: RBI DG

    • 01:01 PM IST

      No reason to extend tokenisation deadline as 35 crore tokens created: RBI DG

    • 12:54 PM IST

      RBI MPC lowered real GDP growth estimate for FY23 to 7% from 7.2%

    • 12:47 PM IST

      Letter to govt on failing to meet inflation target won't be made public: Das

    • 12:42 PM IST

      Expectation is September inflation could be higher than 7%: Shaktikanta Das

    • 12:34 PM IST

      We expect not more than 100 bps hikes ahead: Madhavi Arora, Emkay Global

    • 12:27 PM IST

      MPC to discuss RBI's reply to government on failing to meet inflation target

    • 11:53 AM IST

      RBI to seek feedback for additional framework on securitisation of stressed assets

    • 11:49 AM IST

      RBI Governor Shaktikanta Das to address post-policy press conference at 12 noon

    • 11:41 AM IST

      Should banks follow credit loss model for provisioning: RBI invites views

    • 11:18 AM IST

      We expect the MPC to hike 35bps in the December policy: Kotak's Upasna Bhardwaj

    • 11:13 AM IST

      Market shrugs off nervousness as RBI sticks to predictions; rate sensitive stocks gain

    • 11:08 AM IST

      RBI to continue two-way liquidity fine-tuning operations; situation monitored

    • 10:51 AM IST

      With this repo rate hike, home loans to get dearer: Anuj Puri, ANAROCK Group

    • 10:46 AM IST

      RBI does not have any fixed exchange rate in mind, enters market to curb volatility

    • 10:41 AM IST

      Forex reserve $537.5 billion as on Sep 23, compares favourably with peer economies

    • 10:36 AM IST

      RBI to now conduct only 14-day VRRR auctions; 28-day VRRR merged: Das

    • 10:27 AM IST

      JUST IN: Inflation projection now retained at 6.7% for FY23: RBI Governor

    • 10:19 AM IST

      CPI remains “elevated” due to large adverse supply shocks, firming up of domestic demand

    • 10:10 AM IST

      RBI hikes repo rate by 50 bps as battle on inflation continues in full swing

    • 10:03 AM IST

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    • 09:57 AM IST

      Consensus is for a 50bps hike, says IFA Global ahead of MPC meeting

    • 09:47 AM IST

      Moneycontrol's Twitter Poll: Ahead of RBI MPC, let us know what you think!

    • 09:39 AM IST

      Where will the repo rate settle ultimately?: Catch MC's Banking Central Column

    • 09:21 AM IST

      Catch MC Editor's Take: Stagflation—a hidden yet mightier enemy

    • 09:17 AM IST

      MC Editor's Take: Is MPC paying the price for acting too late on prices?

    • 09:05 AM IST

      Policy guidance critical: Dinesh Unnikrishnan, Editor-Banking & Finance, MC

    • 08:50 AM IST

      No too many options before MPC: Dinesh Unnikrishnan, Editor, MC

    • 08:17 AM IST

      RBI may hold more repo auctions to ease liquidity, say bankers ahead of MPC meet

    • 08:04 AM IST

      Yet another 50 bps rate hike likely today on inflation overhang: Moneycontrol Poll

  • September 30, 2022 / 02:18 PM IST

    This LIVE blog session has concluded. For the latest news, views and updates, stay logged-on to Moneycontrol.

  • September 30, 2022 / 01:54 PM IST

    India has got responses from up to five countries for rupee settlement mechanism, more interested: RBI deputy governor


    -India has received responses from four to five countries for its mechanism for international trade settlement in rupees, while other nations have also shown interest, a deputy governor at the Reserve Bank of India said on September 30.


    -“The response has been fairly good but since the process involves a lot of vetting at the level of banks, at the level of the central bank, at the level of the government, the initial process is taking some time,” T Rabi Sankar told reporters in Mumbai at a post-policy interaction. Sankar did not respond to a query on whether Russia was one of the countries that was interested in the mechanism.

    Read More Here

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  • September 30, 2022 / 01:01 PM IST

    See no reason to extend tokenisation deadline as 35 crore tokens already created, says RBI Deputy Governor T Rabi Sankar

    -The Reserve Bank of India (RBI) has been in talks with stakeholders for implementation of tokenisation and there is no reason to delay it any further, said Deputy Governor T Rabi Sankar ahead of new card storage norms kicking in from October.

    -"The feedback we have from all stakeholders is that it (ecosystem) is perfectly ready. I understand there are a few participants who may not be ready, but that would probably be because of their unwillingness to comply. We don't believe that we should hold back efforts because of such laggards," he said.

    -The deadline to implement tokenisation has been delayed multiple times over the past two years at the request of stakeholders, most recently by three months from 30 June 2022.


    Read More Here

  • September 30, 2022 / 12:54 PM IST

    RBI MPC lowered real GDP growth estimate for FY23 to 7% from 7.2%


    -Reserve Bank of India (RBI) governor Shaktikanta Das projected real GDP growth rate for FY23 at seven percent on September 30 down from the 7.2 percent estimated earlier.


    -Das estimated growth for the second quarter of FY23 at 6.3 percent (versus 6.2 per cent earlier), for the third quarter at 4.6 percent (4.1 per cent earlier) and for the fourth quarter at 4.6 percent (four per cent earlier).


    Read More Here

  • September 30, 2022 / 12:47 PM IST

    JUST IN: Letter to government on failing to meet inflation target won't be made public: RBI Governor

  • ADVERTISEMENT
  • September 30, 2022 / 12:42 PM IST

    JUST IN: Expectation is September inflation could be higher than 7%: RBI Governor Shaktikanta Das 

  • September 30, 2022 / 12:34 PM IST

    We expect not more than 100 bps hikes ahead: Madhavi Arora, Emkay Global 



    -''Clearly, the fast-evolving world order and consistent repricing of Fed’s outsized hikes are strong-arming the EMs. This painful adjustment has not spared the RBI either, which realised the net cost of a supposed soft signalling via shallow hike could be higher than a larger hike of 50bps.


    -This exposes the instability inherent with the classic EM central bank trilemma: one cannot have a stable currency, unfettered capital flows, and independent monetary policy all at the same time.


    -This conscious front-loading could give them some breather next year on shallow hikes ahead. With inflation likely to be largely in line with RBI’s estimates, this week’s 50bps hike will make the ex-post forward real repo rate positive, albeit still lower than the RBI’s estimated real neutral rate of 0.8-1%.


    -At this point, we still think that the RBI would not go too restrictive and terminal rate could hover near the estimated real rates, implying not more than 100bps hikes ahead, including today’s decision,'' said Madhavi Arora, Lead Economist, Emkay Global Financial Services.
     

  • September 30, 2022 / 12:27 PM IST

    MPC to discuss RBI's reply to government on failing to meet inflation target


    -At the post-policy presser, RBI Governor Shaktikanta Das said that they will write a letter to government explaining the failure to meet inflation target below 6 per cent. 


    -The MPC will have a meeting to discuss RBI's reply to government on failing to meet inflation target


    - Expecting inflation to come down closer to target over two-year cycle, added RBI Governor

  • September 30, 2022 / 12:17 PM IST

    Want to state clearly that liquidity in banking system not in deficit: RBI Governor


    -Systemic liquidity over Rs 5 lakh crore, no concerns on liquidity being suddenly tight: RBI Governor

    -Liquidity is not tight, net LAF has been in surplus for last two years, said Shaktkanta Das at post-policy press conference

  • September 30, 2022 / 12:13 PM IST

    RBI Monetary Policy | What is the message from Shaktikanta Das to markets?


    -The message from Reserve Bank of India Governor Shaktikanta Das to markets on Friday is crystal clear -expect more rate hikes over the next few quarters - as the central bank continues its big battle against zooming prices even at the cost of hurting growth for the near term.


    -There was enough hints, during the governor's address, to show that there isn't any compromise on the war against inflation. A 50-basis-point rate hike won't be the last in this rate hike cycle.


    -Look at the numbers. By the RBI's own admission, the threat of high inflation is far from over.  Das said the retail inflation is likely to average at 6 percent in the second half of this year and 6.7 percent for the full year, way above the upper tolerance level of 6 percent.


    Read More
     

  • ADVERTISEMENT
  • September 30, 2022 / 12:02 PM IST

    RBI gave a “Mai Hoon Na” policy: Nilesh Shah,  Group President & MD, Kotak Mahindra Asset Management Company


    -“The RBI gave a “Mai Hoon Na” policy doing a fine tight rope walking between Inflation, Growth and Stability. The RBI is batting on a difficult pitch against a hostile bowling. Rapidly deteriorating global situation, drawdown of systematic liquidity and FX reserves, inflationary pressure and Growth concern are testing the RBI.


    -The RBI has so far batted with few misses. Most important thing is that they haven’t lost the wicket and kept score board moving. The RBI has been proactive and data driven to deal with rapidly evolving situation. They have assured the market that they are in safe hands in the global storm,'' said Nilesh Shah, Group President & MD, Kotak Mahindra Asset Management Company.

  • September 30, 2022 / 11:53 AM IST

    RBI to seek feedback for additional framework on securitisation of stressed assets


    -Reserve Bank of India (RBI) will soon launch a discussion paper seeking industry feedback on introducing a framework for securitisation of stressed assets in addition to the asset reconstruction company (ARC) route, Governor Shaktikanta Das said on September 30.

    -Currently, only the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act provides a framework for such securitisations by asset reconstruction companies (ARCs).

    -“However, based on market feedback, stakeholder consultations, and recommendations of the task force on development of secondary market for corporate loans, it has been decided to introduce a framework for securitisation of stressed assets in addition to the ARC route, similar to the framework for securitisation of standard assets,” the central bank said.


    Read More Here