The rate-setting panel of the Reserve Bank of India (RBI) hiked the key lending rate, the repo rate, by 50 basis points (bps), taking the policy rate back to the late-2019 levels. One bps is one-hundredth of a percentage point.
With the latest hike from the six-member Monetary Policy Committee (MPC), the repo rate now stands at 5.4 per cent. Repo is the rate at which the central bank lends short-term funds to banks. Changes in this rate typically gets transmitted to the broader banking system.
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RBI Monetary Policy LIVE | MC Pro: Does monetary policy really work?
-By targeting aggregate demand across the whole economy, monetary policy may be too blunt an instrument to tackle the ongoing inflationary pressures in the economy, instead adding to the already chronic high unemployment rates in the country
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RBI Monetary Policy LIVE | RBI received requests from banks to set up Rupee Vostro accounts: Deputy Governor Rabi Sankar
-RBI has received requests from banks to set up Rupee Vostro accounts to facilitate international trade in rupees, a deputy governor of the central bank said on August 5.
-“There have been requests from banks,” Rabi Sankar said in a press briefing after the monetary policy decision.
-Amid a persistent weakness in the rupee’s exchange rate versus the dollar, the RBI on July 11 announced a mechanism to settle trade transactions in rupee terms.
-The central bank said that the move was to promote growth of global trade and to support increasing global interest in the rupee.
RBI Monetary Policy LIVE | Can't reveal the thinking of RBI on neutral interest rate: Governor Shaktikanta Das
-The path to the neutral interest rate is a two-part journey: first when inflation falls within the tolerance band and two, when it aligns with the (medium-term) target, saidRBI Deputy Governor Michael Patra. RBI Governor Shaktikanta Das said that he can’t reveal thinking of RBI on the neutral interest rate.
RBI Monetary Policy LIVE | Bank stocks in a sweet spot, say experts as RBI grows more hawkish
-With the Reserve Bank of India (RBI) restoring benchmark policy rates to pre-pandemic levels, bank stocks may emerge as winners and real estate names will likely take a hit, said analysts.
-Bank stocks have already been rallying for a couple of months thanks to improved financial performance and recovery in economic activities. Meanwhile, real estate stocks have also risen due to record sales in recent quarters.
-“We have seen system liquidity tighten since the RBI started withdrawing excess liquidity, and system credit growth improved to 14 percent. With credit growth looking up, we believe the banks with a higher share of floating rates and a robust CASA-led deposit franchise should be placed well in this increasing interest rate environment,” said Naveen Kulkarni - Chief Investment Officer, Axis Securities.
RBI Monetary Policy LIVE | Liquidity normalisation a multi-year process; will spill over next year too: Das
-Overall liquidity today is fairly high, about Rs 5 lakh-6 lakh crore. Normalising it will be a multi-year process. The process will spill over into next year also, said RBI Governor Shaktikanta Das in the post-policy press conference
RBI Monetary Policy LIVE | As RBI gives an umbrella for the rupee, bond market left in the downpour
-India’s central bank has chosen to use its sturdy umbrella of forex reserves to keep the exchange rate from complicating its fight for price stability and that means it has to leave the bond market to fend for itself. Understandably, the bond market is feeling snubbed.
-RBI Governor Shaktikanta Das highlighted all the possible ill effects of elevated levels of inflation in his statement on Friday after the central bank’s six-member rate-setting committee voted unanimously for a 50-basis point hike in the repo rate. One basis point is one-hundredth of a percentage point.
-. He also said that the rupee has behaved in an orderly way and that forex reserves are a sturdy umbrella against external pressures on the Indian rupee. The rupee has appreciated roughly 0.5 percent so far on Friday.
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RBI Monetary Policy LIVE | MPC member Jayanth Varma disagreed with RBI's policy stance, shows statement
-Jayanth R Varma, one of the six members of monetary policy committee (MPC), expressed reservations on the continuation of withdrawal of accommodative stance, showed the policy document.
-Five members of the panel, Shashanka Bhide, Ashima Goyal, Rajiv Ranjan, Michael Debabrata Patra and Shaktikanta Das, voted to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.
-However, Varma expressed reservations on this part of the resolution, the statement showed. Read More Here
RBI Monetary Policy LIVE | Can’t assess CAD for FY23 on one month’s merchandise trade: Michael Patra
-We can’t assess the current account deficit for FY23 as a whole on the basis of one month’s merchandise trade data, said RBI Deputy Governor Michael Patra at the post-policy press conference
-We see FY23 current account deficit at sustainable levels. But I would not like to divulge the exact number we expect for current account deficit, said RBI Governor Shaktikanta Das
RBI Monetary Policy LIVE | Our monetary policy actions have not fueled domestic inflation: RBI Governor
-So far as current inflation is concerned, I don’t think demand is a factor. It’s primarily due to supply issues and imported inflation. Our monetary policy actions have not fueled domestic inflation, said Governor Das
- I can’t say at what inflation level the MPC will pause on interest rates as the situation is dynamic and very uncertain, he added in the post-policy press conference.
RBI Monetary Policy LIVE | CPI inflation has peaked, now at “unacceptably high levels”: RBI Governor
-Resilient economic activity gives RBI space to act to contain inflation, said RBI Governor Shaktikanta Das in a post-policy press conference.
-Current account deficit is expected to remain within manageable limits. We have the ability to finance the current account deficit. Forex reserves remain strong and we will deal with excess volatility in the exchange rate.
-MPC targets inflation while keeping in mind the objective of growth. The rupee's exchange rate is an indirect determinant of policy through its effect on inflation. But the level of exchange rate itself is not a factor for the MPC to deliberate, he added.
RBI Monetary Policy LIVE | A 50 bps rate hike has become new normal for central banks: RBI Governor
-A 50 bps rate hike has become new normal among global central banks, said Governor Das in the post-policy press conference
-Most likely scenario is banks will pass on impact of repo rate hike to deposit rates. This is already happening and the trend will continue, he added.
RBI Monetary Policy LIVE | Indian economy an island of macroeconomic & financial stability: RBI Governor
-In an ocean of high turbulence, the Indian economy is an island of macroeconomic and financial stability, said RBI Governor Shaktikanta Das in a post-policy press conference today
-Domestic situation is the primary determinant of our monetary policy actions, he added
RBI Monetary Policy LIVE | RBI proposes Bharat Bill Payment system to accept cross-border inward bill payments
-Bharat Bill Payment System to strengthen cross border payment ecosystem, make transaction seamless for NRIs.Bharat Bill Payment System is a system driven by the National Payments Corporation of India (NPCI) providing an interoperable and accessible "Anytime Anywhere" bill payment service to all customers across India.
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RBI Monetary Policy LIVE | RBI to conduct two-way fine-tuning liquidity operations depending on evolving conditions, says Governor Das
-The Reserve Bank of India (RBI) will conduct two-way fine-tuning liquidity operations depending on evolving financial conditions, the governor of the central bank said on August 5. “Going forward, the RBI will remain vigilant on the liquidity front and conduct two-way fine-tuning operations as and when warranted,” the RBI Governor Shaktikanta Das said during the bi-monthly Monetary Policy announcement.
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RBI Monetary Policy LIVE | Market shrugs off central bank hike as rate-sensitive stocks continue climb
-Shares of auto companies and banks either maintained their gains or climbed further after the Reserve Bank of India hiked repo rate – the rate at which RBI lends to banks – by 50 basis points to 5.40 per cent. The policy rate is the highest since August 2019.
-ICICI Bank climbed 1.5 percent, IDFC First Bank 1.4 per cent, SBI 1 per cent and Axis Bank 0.78 per cent. Nifty Bank was up 0.72 per cent. Read More Here
Catch MC's live coverage of stock market action here
RBI Monetary Policy LIVE | Indian economy showing signs of broadening; improvement in urban demand
-RBI Governor Shaktikanta Das said Indian economic activity was showing signs of broadening, with high-frequency indicators suggesting improvement in urban demand. The picture for rural demand, however, is mixed.
-Capacity utilization in manufacturing sector is 75.3%, above its long-run average. This suggests need for fresh investment.Good progress of southwest monsoon, kharif sowing to support rural consumption
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RBI Monetary Policy LIVE | Another 50 basis point hike done, so what's next?
-A 50 basis point (bp) hike in repo rate shows the singular focus on inflation of the monetary policy committee (MPC). One bp is one hundredth of a percentage point. With this, the MPC has hiked the repo rate -- at which the RBI lends short term funds to banks -- by a total of 140 bps in the current rate hike cycle.The obvious question first: Why did the MPC go for a third consecutive rate hike today? Answer is simple; both the government and the monetary policy makers are puzzled by such high retail inflation that is hurting all walks of life. And that's unlikely to change in the foreseeable future.
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RBI Monetary Policy LIVE |
Despite drawdown of foreign exchange reserves to limit rupee volatility, India’s reserves are fourth highest in the world, announced RBI Governor Shaktikanta Das
RBI Monetary Policy LIVE |
Benchmark 10-year government bond yield jumped 10 basis points to 7.25 per cent as RBI Governor Shaktikanta Das said further withdrawal of monetary accommodation is warranted due to elevated inflation. The more-than-priced in 50 basis point hike in repo rate too dampened sentiment.
RBI Monetary Policy LIVE | MPC noted CPI inflation has eased since April but remains uncomfortably high
-MPC stressed sustained high inflation can destabilise inflation expectations, harm growth in medium term
-RBI Governor Shaktikanta Das said further withdrawal of monetary accommodation is warranted due to elevated inflation.
RBI Monetary Policy LIVE |
FY23 CPI inflation forecast assumes price of Indian crude oil basket at $105/barrel, announced RBI Governor Shaktikanta Das
RBI Monetary Policy LIVE | RBI retains CPI inflation forecast at 6.7% for FY23; July-September seen at 7.1%
-Household inflation expectations have eased, but remain elevated, said RBI Governor Shaktikanta Das
-July-September CPI inflation seen at 7.1%
-October-December CPI inflation seen at 6.4%
-January-March 2023 CPI inflation seen at 5.8%
RBI Monetary Policy LIVE | RBI retains growth forecast for FY23 retained at 7.2%, April-June'23 at 6.7%
-RBI Governor Shaktikanta Das announced that the FY23 GDP growth forecast has been retained at 7.2%
-April-June GDP growth seen at 16.2%
-July-September GDP growth seen at 6.2%
-October-December GDP growth seen at 4.1%
-January-March 2023 GDP growth seen at 4.0%
RBI Monetary Policy LIVE | RBI MPC hikes repo rate by 50 basis points to 5.4%, SDF adjusted to 5.15%
-The RBI Monetary Policy Committee hiked repo rate by 50 basis points to 5.4% and the Standing Deposit Facility (SDF) stands adjusted to 5.15%
RBI Monetary Policy LIVE | Indian economy grappling with problem high inflation: Shaktikanta Das
-RBI Governor Shaktikanta Das is now delivering the MPC statement. Globalisation of inflation coinciding with de-globalisation of trade, he said.
-Indian economy naturally impacted by the global economic situation, added the RBI Governor
RBI Monetary Policy LIVE | UBS sees RBI delivering 25-30 bps rate hike this week, and pausing after October
-The Reserve Bank will deliver two more rate increases with the first of 25-30 bps later this week, and then pause for data-prints on domestic inflation and the US economy, says a foreign brokerage.
-The US economy is widely feared to be headed towards a recession this year having already contracted by 0.9 per cent in the June quarter and 1.6 per cent in the previous. If an economy contracts for three consecutive quarters, then it is considered that the economy is in recession.
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RBI Monetary Policy LIVE | RBI to write explanation letter to Parliament if inflation stays above target for 3 quarters
-Barclays note suggests that Jayanth Varma - probably the most hawkish MPC member - was of the view that the MPC cannot impose unacceptable growth sacrifices in order to bring down inflation.
-Barclays note reminds us that, in the likely event that inflation stays above target for 3-consecutive quarters, the RBI will be obliged to write a letter of explanation to parliament.
RBI Monetary Policy LIVE | Moneycontrol Pro Panorama | Your one-minute guide to MPC deliberations
-The rationale: There has been a lot of chatter about inflation peaking after retail inflation steadied at around 7 percent in June and the average reading for the first quarter came in below RBI estimates. However,
a) The recent inflation numbers are still way higher than the outside limit of 6 percent in RBI’s inflation targeting mandate.
b) Core inflation is sticky and even the headline number may not come down in a hurry.
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RBI Monetary Policy LIVE | Falling Treasury Bill yields indicate aggressive MPC rate hikes less likely: Experts
-Yields on Treasury Bills fell sharply on August 3, indicating that concerns of an aggressive rate hike by the Reserve Bank of India have eased, bankers and money market participants said.
-Treasury Bills, or T-Bills, are short-term debt instruments issued by the government. They are presently issued in three tenors -- 91 days, 182 days and 364 days.
-T-Bill auctions typically take place every Wednesday. Short-term money market instruments, including T-Bills, are very sensitive to the liquidity position in the banking system and rate hikes by the central bank.
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RBI Monetary Policy LIVE | Moneycontrol Poll : MPC set to hike repo rate by at least 35 bps this week
-The Reserve Bank of India’s rate-setting panel will increase the key policy rate by at least 35 basis points this week, said the majority of 15 economists who participated in a Moneycontrol poll. The Monetary Policy Committee will began its three-day meeting on August 3 and announce the outcome on August 5.
-If realised, this month's increase in the repo rate would be the third consecutive one since May. The MPC raised the policy repo rate by 90 basis points in May and June to quell inflationary pressures. One basis point is one-hundredth of a percentage point. The repo rate, at which the RBI lends short-term funds to banks, currently stands at 4.9 percent.
RBI Monetary Policy LIVE |
Reserve Bank of India (RBI) Governor Shaktikanta Das will deliver the MPC statement today at 10 am. A post-policy press conference will be held at 12 noon
RBI Monetary Policy LIVE |
Good morning and welcome to Moneycontrol's LIVE coverage of the RBI Monetary Policy today on August 5, 2022. Stay tuned for the latest news, developments, and analysis!
