RBI Monetary Policy Highlights: The Monetary Policy Committee (MPC) has decided to maintain status quo and keep the repo rate unchanged at 4 percent. The reverse repo rate will continue to be 3.35 percent. Reserve Bank of India (RBI) Governor Shaktikanta Das said the policy stance continues to be "accommodative". This is the eighth consecutive time the MPC maintained a status quo in rates. The MPC statement comes amid easing inflation and recovery in economic growth.
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RBI Monetary Policy LIVE Updates:
Naveen Kulkarni, Chief Investment Officer, Axis Securities: "RBI continues to be supportive of driving growth in the economy through benign interest rates, keeping liquidity conditions comfortable for all stakeholders. Unchanged policy rates and an accommodative stance keep up the optimism of market participants. Lower inflation projections from 5.7% to 5.3% for FY22 would be a positive factor, signaling to harden interest rates unlikely in the near term. GDP growth remained at 9.5%, with upward revisions in Q2/Q3 FY22 hint at gradual recovery, as the aggregate demand is yet to pick up meaningfully."
RBI Monetary Policy LIVE Updates:
Umesh Revankar, MD & CEO, Shriram Transport Finance:"We welcome RBI's unchanged accommodative stance as long as necessary, commitment to maintaining adequate system liquidity to support growth even as risks to inflation have inched up and core inflation remains sticky. Given the backdrop of lingering uncertainties regarding Covid, certain global developments this is positive step as while the recovery is gaining traction it still remains uneven, demand conditions are yet to fully recover to pre-pandemic levels and there is need for continued policy support. MSMEs, small businesses, unorganised sector have been worst hit during the pandemic and we welcome the RBI’s continued policy support towards these sectors."
RBI Monetary Policy LIVE Updates:
VikashKhandelwal, CEO,EqaroGuarantees: "Thecentral bank kept the key rates and policy stance unchanged for the 8th time in a row thus allaying concerns around a possible unwinding or availability of adequate liquidity. The overall recovery especially in the services and the technology-driven sectors coupled with inflation being well within RBI’s comfort levels helped the central bank stay with the current excess levels of system liquidity. This should help boost economic growth, creditofftakeand is a big sentiment booster for the bond market. The ombudsman forNBFCswill help strengthen the grievance redressal mechanism and lead to a speedy resolution."
RBI Monetary Policy LIVE Updates:
The equity market cheered the continuity in policy support after the Reserve Bank of India's MPCeft key policy rates unchanged and retained the accommodative stance in its bi-monthly policy meeting.
The benchmark indices extended gains with the Nifty50 rising 123 points to 17,913.50 and the BSE Sensex trading above the 60,000 mark at 60,111.55 with gains of 433.72 points at 11:36 hours IST.
Read:MPC maintains status quo on repo; 12 rate-sensitive stocks with potential to return up to 29%
RBI Monetary Policy LIVE Updates:
Ram Raheja, Director, S Raheja Realty: “The decision to maintain the repo rate and reverse repo rate by the RBI is in line with expectations. It has also affirmed to its accommodative stance, which will provide stability to the markets and give much-needed liquidity. This status quo will further allow demand creation including for high involvement products like real estate. RBI's resolve to keep easy system liquidity and low interest is key to the recovery of the real estate industry and the overall economy. The real estate sector is expected to continue benefiting from the pass-through of low benchmark lending rates to end consumers, especially in the residential segment. The optimism of RBI regarding economic growth is welcome; It will also help in sustaining economic stability as well as keep the real estate sector stay afloat during these unprecedented times. The demand for homes is likely to continue to gain momentum going forward’’
RBI Monetary Policy LIVE Updates:
About the sharp rise in fuel prices, the RBI Governor said the central bank has flagged the issue to the government. He saidthe government has taken several measures on pulses, edible oils and certain other supply side issues.
RBI Monetary Policy LIVE Updates:
“The government is discussing with authorities toclarify issues on global bond inclusion. Hopefully, global bond inclusion should happen in the next few months,” said RBI Governor Shaktikanta Das.
RBI Deputy governor Michael Patra said “Will wait to see recovery getting strongly entrenched. RBI has all the adequate instruments; the issue is of timing and calibration”
RBI Monetary Policy LIVE Updates:
Addressingthe media,
Shaktikanta Das said the RBI's overall approach on liquidity is that of gradualism. With the VRRR announcement, he said the central bank is following "the roadmap we have already set".RBI Monetary Policy LIVE Updates:
The central bank has announced geo-tagging of payments system to enhance the payment acceptance infrastructure.
The geo-tagging technology will provide location information on an ongoing basis and can be used in targeting areas that lag behind in payments acceptance infrastructure.
The RBI will propose a framework for geo-tagging by capturing geographical coordinates - latitude and longitude of physical payment acceptance infrastructure, like Point of Sale (PoS) terminalsand Quick Response (QR) codes, used by merchants.
RBI Monetary Policy LIVE Updates:
Madhavi Arora, Lead Economist, Emkay Global Financial Services:“The MPC expectedly kept the key rates unchanged unanimously and reiterated its accommodative stance both on rates and liquidity. However, Prof Varma’s dissent on continuation of accommodative stance for foreseeable future continues to keep MPC in splits. Inflation forecast is expectedly reduced to 5.3% from 5.7% for FY22 (Emkay: 5.2%), while GDP growth remains unchanged at 9.5% (Emkay: 10.1%). The RBI's stance on liquidity management was the most watched for. As we expected, the RBI did not shock the system with a reverse repo hike, and the policy is well used as a lever to prepare markets for a gradualist approach toward normalization through both communication and action.
RBI Monetary Policy LIVE Updates: Key takeaways from the RBI Governor's address:
> The MPC has maintained monetary policy status quo status quo for the eight time in a row. The repo rate is unchanged at 4 percent while the reverse repo rate kept the same at 3.35 percent.
>The projection for real GDP growth is retained at 9.5 percent for FY 2021-22. This consists of 7.9 percent in Q2, 6.8 percent in Q3 and 6.1 percent in Q4 of 2021-22. The Real GDP growth for Q1 of FY 2022-23 is projected at 17.2 percent.
> The central bank has lowered its FY22 CPI Inflation target to 5.3 percent from the earlier 5.7 percent. It also saw July-September CPI inflation at 5.1 percent compared to the 5.9 earlier. The October-December CPI Inflation is estimated at 4.5 percent compared to the 5.3 percent earlier.
RBI Monetary Policy LIVE Updates:
The RBI has increased the transaction limit onImmediate Payment Service (IMPS) of the National Payments Corporation of India (NPCI) to Rs 5 lakh from Rs 2 lakh.
IMPS providesround-the-clock instant domestic funds transfer facility and is accessible through various channels like internet banking, mobile banking apps, bank branches, ATMs, SMS and IVRS.
The transaction limit of Rs 2 lakh was capped in January 2014 for the channels and for SMS and IVRS the limit is Rs 5,000.
RBI Monetary Policy LIVE Updates: RBI to halt GSAP operations, will keep conducting OMOs as needed
The RBI has decided to halt the Government Securities Acquisition Programme (G-SAP). While unveiling the bi-monthly monetary policy review on October 8, RBI Governor Shaktikanta Das said the liquidity overhang and absence of fresh government borrowing suggest that bond purchases are not required at the moment.
Das said G-SAP has been successful and anchoring yield expectations, coupled with other liquidity measures.
RBI Monetary Policy LIVE Updates:
All six members of the MPC – Shashanka Bhide, Ashima Goyal, Prof. JayanthVarma, Mridul Saggar,Michael Debabrata Patra andShaktikanta Das – unanimously voted to keep the policy repo rate unchanged. The vote on the accomodative policy stance was 5:1,Jayanth Varma voting against the resolution.
RBI Monetary Policy LIVE Updates:
The MPC revised its projection for July-September (Q2) CPI inflation to 5.1 percent from the previous forecast of 5.9 percent. The estimate for Q3FY22 CPI Inflation has been revised to 4.5 percent from 5.3 percent.
RBI Monetary Policy LIVE Updates:
the RBI Governor said, "As the economy shows signs of emerging from the COVID-19 inflicted ravages, a near consensus view emerging among market participants and policy makers is that the liquidity conditions emanating from the exceptional measures instituted during the crisis would need to evolve in sync with the macroeconomic developments to preserve financial stability. This process has to be gradual, calibrated and nondisruptive, while remaining supportive of the economic recovery."
RBI Monetary Policy LIVE Updates:
RBI Governor Shaktikanta Das said, "Overall, aggregate demand is improving but slack still remains; output is still below pre-pandemic level and the recovery remains uneven and dependent upon continued policy support. Contact intensive services, which contribute about 40 per cent of economic activity in India, are still lagging. Supply side and cost push pressures are impinging upon inflation and these are expected to ameliorate with the ongoing normalisation of supply chains."
RBI Monetary Policy LIVE Updates:
Special 3-year LTRO of Rs 10,000 crore for SFBs extended till December 31, and made available on-tap. Proposed to introduce framework for retail digital payments in offline mode. Its has also been proposed to raise the transaction limit on IMPS transactions to Rs 5 lakh from the current cap of Rs 2 lakh.
RBI Monetary Policy LIVE Updates:
Shaktikanta Das said, "RBI’s approach is that of gradualism, don’t want suddenness or surprises."
RBI Monetary Policy LIVE Updates:
Remain in readiness to undertake G-SAP when warranted.Market appetite for 14-day variable rate reverse repo is enthusiastic.Will complement 14-day VRRR with 28-day VRRR.Variable rate reverse repos must not be read as a reversal of accommodative policy stance.
RBI Monetary Policy LIVE Updates:
Pent-up demand, festival season should boost urban demand. Recovery in demand gathered pace in Aug-Sep. Pick-up in import of cap goods point to some recovery in activity: Shaktikanta Das
RBI Monetary Policy LIVE Updates:
MPC revisesFY22 CPI inflation projection to 5.3 percentfrom 5.7 percent.
RBI Monetary Policy LIVE Updates:
MPC retains FY21 GDP growth forecast of 9.5 percent. Projection for Q2FY22 GDP growth has been raised to7.9 percent from the previous estimate of 7.3 percent.
RBI Monetary Policy LIVE Updates:
India in a much better place today than at the time of the last MPC meeting. Growth impulses are strengthening, inflation trajectory more favourable than expected: Shaktikanta Das
RBI Monetary Policy LIVE Updates:
High frequency indicators suggest economic activity has gained momentum. Core inflation remains sticky. July-September Consumer price Index (CPI) inflation was lower than anticipated:ShaktikantaDas
RBI Monetary Policy LIVE Updates:
RBI Governor Shaktikanta Das saidthe central bank will ensure that inflation remains within target range. He said the MPC's policy rate decision was unanimous, while thedecision on thestance was 5:1.
JUST IN: RBI maintains status quo
This means the repo rate is unchanged at 4 percent, and reverse repo rate at 3,35 percent. The MPC has decided to retain the "accomodative" policy stance.
RBI Monetary Policy LIVE Updates:
Dinesh Unnikrishnan, Deputy Editor: A tightrope walk for MPC, yet no surprises likely!
The MPC verdict is due at a time when there are clear signals of growth recovery in the economy and inflation is easing. Yet, the MPC may wait for more cues before taking a rate action. The consensus is a status quo and a change in the language on the forward guidance. There could be some clear hint on unwinding the easy money policy in phases and guidance on future course of policy action. Continuation of some liquidity measures expected. Fingers crossed!
RBI Monetary Policy LIVE Updates:
The wholesale price-based inflation rose to 11.39 percent in August in India, said the Ministry of Commerce and Industry on September 14. The Wholesale Price Index (WPI) inflation was 0.41 percent in August 2020, the ministry said in a press release. Snapping the two-month easing trend, WPI inflation rose in August and remained in double-digit for the fifth consecutive month. In July 2021, WPI inflation stood at 11.16 percent.
RBI Monetary Policy LIVE Updates:
The softening of prices of various food items is likely to extend into the third quarter and contain the upside price pressures on headline inflation stemming from fuel and core prices, the central bank said in its bulletin on September 16.
"The trajectory of inflation is shifting down more favourably than anticipated,” the Reserve Bank of India (RBI) said.
"As pandemic scars heal and supply conditions are restored with productivity gains, a sustained easing of core inflation can be expected, which will reinforce the growth-supportive stance of monetary policy,” it added. (Inputs from PTI)
RBI Monetary Policy LIVE Updates:
Inflation has been running red hot in many economies of the world, writesIndranil Pan, Chief Economist at YES Bank.
However, Covid-19 was expected to have slowed consumption and built up precautionary savings. The messaging from the central bankers around the world has been that the supply chain disruptions lie at the root of high inflation and are likely to be 'transitory'. What is confusing for the central bankers is probably the fact that the transitory phase has been running much longer than was earlier expected.
Read:Inflation woes keep central banks at a fix over monetary policy moves
For the market reaction to the RBI policy announcement, follow our LIVE coverage.
RBI Monetary Policy LIVE Updates:
RBI Governor Shaktikanta Das is expected to make the statement on the MPC's decision at 10 am. A post-policy press conference will be held at 12 pm. The RBI Governor's statement and the press conference can be viewed live on the
RBI's YouTube channel.RBI Monetary Policy LIVE Updates:
The purpose of low interest rate policy is to support the real economy,but this has not happened yet, given the large output gaps and the lack of credit offtake, believes TRUST Mutual Fund Chief ExecutiveSandeep Bagla.
In an interview withMoneycontrol, he told Sunil Shankar Matkar that with inflation readings likely at 4-5 percent over the next two months, the RBI does not have a pressing need to guide the markets about normalisation.
RBI Monetary Policy LIVE Updates:
The MPCis more likely to vote for holding the policy repo rate steady at 4percent, notwithstanding rising inflationary pressures in the economy and the depreciation of the rupee. However, it may try to strike a balance between supporting growth with concerns of rising inflation in its stance. A revision of its projection for inflation for the second half of the financial year and the full year looks likely, given the twin challenges from the depreciating rupee and elevated international prices of commodities. The rupee fell to its six-month low of almost 75 to a dollar as the committee sat down for its three-day deliberation.
Read:MPC may worry about inflation as energy costs rise, rupee depreciates
RBI Monetary Policy LIVE Updates:
The RBI may start pulling out surplus liquidity and eventually move towards normalisation of interest rates, putting an end to the days of easy money, as the economy revives and Covid-19 concerns ease, economists said.
Core liquidity surplus is at a record high of Rs 12 lakh crore and the RBI is likely to calibrate the overall surplus, with the outlook for growth having improved over the past three to four months,Vivek Kumar, an economist at QuantEco Research told Moneycontrol.
Read:RBI Policy | No fireworks expected, days of easy money may be over, say top economists
RBI Monetary Policy LIVE Updates:
Ahead of the announcement by RBI Governor Shaktikanta Das, here is what we can expect:
>Rates likely to remain unchanged
> Trends in Consumer Price Index
>Likely optimism on growth
>Roadmap on liquidity management
>Previous liquidity measures may continue
Good morning! Welcome to Moneycontrol's LIVE coverage of the RBI monetary policy announcement. The RBI is expected to keep the repo rate unchanged and continue with the "accomodative" policy stance.
