RBI Monetary Policy LIVE Updates: The monetary policy committee (MPC), which has three members from the RBI and three external members, has left the repo rate unchanged at 6.50 percent for a second straight meeting. Governor Shaktikanta Das said the MPC voted unanimously to leave repo rate unchanged. Standing Deposit Facility Rate remains at 6.25%; while Marginal Standing Facility Rate and Bank Rate also unchanged at 6.75%. MPC voted 5 members to 1 to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, Das said. The central bank has raised repo rates by a total of 250 bps since May 2022. The steady increase was meant to fight inflation -- which has finally began subsiding.
Top 10 takeaways from Governor Shaktikanta Das' speech
-- Headline inflation on a downward trajectory, seen above 4% in FY24
-- Will further act as required to anchor inflation expectations
-- Avg liquidity in surplus mode, could increase as Rs 2k note get deposited
-- Rural demand on revival path; domestic demand supportive of growth
-- Conditions favourable for capex cycle to gain momentum
-- Headwinds from weak demand, global volatility, risk of El Nino
-- Real GDP for FY24 seen at 6.5%
-- Real policy rate continues to be positive
-- CAD expected to have moderated further, should be manageable in FY24
-- Need to maintain Arjuna's eye on evolving inflation situation
RBI MPC final thoughts:
And that’s a wrap from Mint Street. The MPC’s decision turned out to be along expected lines, as was the minor cut in the CPI inflation forecast for 2023-24 to 5.1 percent. Meanwhile, the RBI retained its GDP growth forecast for the current year at 6.5 percent. If there is a key takeaway from today’s proceedings, it is Governor Shaktikanta Das repeatedly stressing that the MPC is focused on aligning inflation to its 4 percent target on a durable, and not one-off, basis. Clearly, there is some way to go for the RBI to win its fight against inflation.
About 50% of Rs 2,000 notes in circulation back in banking system, says RBI governor
The RBI, on May 19, announced the withdrawal of Rs 2000 notes as part of the clean note policy.... Read More
RBI MPC Live Updates | Press conference:
And this concludes the press briefing for the day.
RBI MPC Live Updates | Press conference:
RBI Deputy Governor Michael Patra: The MSP hikes are about 7-8 percent. So this will have an impact of 10-12 basis points over and above our inflation projections.
RBI MPC Live Updates | Press conference:
RBI Deputy Governor M Rajeshwar Rao: It is not correct to infer that the level of write-offs have triggered our decision to issue a comprehensive regulatory framework governing compromise settlements and technical write-offs.
RBI MPC Live Updates | Press conference:
RBI Deputy Governor Michael Patra: Caution among banks to park funds at our variable rate reverse repos is due to the upcoming advance tax outflows.
RBI MPC Live Updates | Press conference:
RBI Governor Shaktikanta Das: We have no thinking to issue norms about financial influencers. SEBI is dealing with that.
RBI MPC Live Updates | Press conference:
RBI Governor Shaktikanta Das: Our inflation target is 4 percent. So our effort will be to align our actions to reach that target. To say anything more than that given the uncertainties is not desirable.
RBI MPC Live Updates | Press conference:
RBI Governor Shaktikanta Das: It is a pause in this meeting. I have not said anything about pivoting. Everything I said about a pivot in April, I would like to reiterate that.
RBI MPC Live Updates | Press conference:
RBI Governor Shaktikanta Das: I would like to request the public to go to bank branches to deposit or exchange Rs 2,000 currency notes at their convenience. There is no reason to rush. At the same time, please do not leave it to the last moment.
RBI MPC Live Updates | Press conference:
RBI Governor Shaktikanta Das: So far, about Rs 1.8 lakh crore worth of Rs 2,000 notes have come back to the banking system. This is about half the notes in value terms that were in circulation as on March 31, 2023.
About 85 percent of Rs 2,000 notes are being deposited in bank accounts, which is in line with our expectations.
RBI MPC Live Updates | Press conference:
RBI Deputy Governor T Rabi Sankar: "No specific date for the launch of CBDC to the public at large. But we hope to have 1 million customers by June end. We are working right now on making the CBDC QR codes interoperable with UPI."
RBI MPC Live Updates | Governor Shaktikanta Das addresses the press:
"The rate action is obviously a pause. Future action will depend on the evolving situation. There is no room for complacency. The MPC is resolutely focused on the 4 percent CPI inflation target."
Markets continue to trade higher post RBI policy decision: Summary
- The 30-share BSE Sensex climbed 174.2 points to 63,317.16 in morning trade, NSE Nifty advanced 49.2 points to 18,775.60.
- From the Sensex pack, NTPC, Power Grid, Larsen & Toubro, HDFC Bank, IndusInd Bank, HDFC, State Bank of India, ICICI Bank, UltraTech Cement, Tata Steel and Reliance Industries were major gainers.
- Kotak Mahindra Bank, Mahindra & Mahindra, Tata Consultancy Services, Nestle, Axis Bank, HCL Technologies, Wipro, Tech Mahindra and Hindustan Unilever were among the laggards.
-In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong were trading lower, meanwhile the US markets ended mostly lower on Wednesday.
-Global oil benchmark Brent crude dipped 0.27 per cent to USD 76.74 a barrel.
- Foreign Institutional Investors bought equities worth Rs 1,382.57 crore.
With PTI inputs
Summary of MPC announcements made by Governor Shaktikanta Das:
Forex
— Forex reserves stood at at $595.1 billion as on June 2.
— Indian rupee has remained stable since January this year and domestic demand condition remains supportive of growth.
— Indian economy and financial sector stand out as resilient. Domestic macro fundamentals are strengthening.
Liquidity
— Average system liquidity is in surplus mode and could increase as Rs 2,000 notes get deposited in banks, says RBI Governor Das.
— Net inflow in non-resident deposits increased to $8 billion in FY'23 from $3.2 billion in the previous year.
RuPay forex card
— The apex bank to issue RuPay forex cards, guidelines on default loss guarantee arrangement in digital lending.
— Governor Das said the RBI will issue norms on default loss guarantee arrangement in digital lending for orderly development of the eco-system and improve credit penetration.
— The central bank proposes to expand the scope and reach of e-RUPI vouchers by permitting non-bank Prepaid Payment Instrument (PPI) issuers to issue e-RUPI vouchers.
Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS
The RBI's decision to keep policy rates unchanged was in-line with expectations. It was primarily supported by the significant drop in retail inflation in Apr '23 and the further softening of inflationary pressures expected in the coming months. We expect an extended pause on interest rates from the regulator in the near future. While the inflation is expected to hover above the tolerance limit in FY24, the RBI has marginally reduced its inflation forecast to 5.1% vs 5.2% in the previous policy.
The banking credit growth continues to show strength, as seen in the latest RBI print for Apr '23. Q4 has been a strong quarter for banks regarding growth, and management commentary around no visible signs of demand slowdown so far is reassuring. Post a strong show on NIMs in FY23, and margin pressures will surface in FY24, given the sharp inch-up in CoF with deposit repricing.
However, the quantum of compression could be restricted, supported by the decision to withdraw Rs 2,000 notes from circulation. Banks' Earnings growth will remain healthy, though the pace could decelerate compared to growth in FY23.
Summary of MPC announcements made by Governor Shaktikanta Das:
GDP
— GDP projection for in FY24 stays unchanged at 6.5 percent, says RBI Governor Das.
— RBI chief Das said real GDP growth is projected at 6.5 percent for FY24, — Q1 at 8 percent , Q2 at 6.5 percent, Q3 at 6 percent and Q4 at 5.7 percent.
— Pace of global economic activity to decelerate due to geopolitical situation.
Inflation
— Headline inflation is still above target and is expected to remain so according to our projections.
— RBI Governor Das said: "Our goal is to achieve the inflation target of 4 per cent and keeping inflation within the comfort band of 2-6 percent is not enough."
— The MPC has slashed inflation aim to 5.1 percent from 5.2 percent forecast in April policy.
— MPC decided by a majority of five out of six members to remain focused on withdrawal of accommodation.
CAD
— Current account deficit (CAD) is likely to have moderated further and should be eminently manageable in 2023-24, says the central bank chief.
RBI MPC: Non-committal pause, with an eye on still-fluid global situation
Madhavi Arora, Emkay
(1) As expected, the MPC policy differed little from April, hinging its reaction function to fluid global situation and domestic growth-inflation backdrop, and retained policy flexibility. The policy tone was balanced yet non-committal, with no change in stance, stressing their inflation-fighting credibility.
The MPC acknowledged that higher underlying DM inflation has compelled the central banks to restart the hiking cycle by the DMs, depicting “pause ≠ terminal hike” (read RBA and BoC).
(2) Admittedly, cooling tight labour markets and tackling sticky inflation have proved more difficult than expected forDM central banks. The US Futures market is now pricing 65% probability for Fed’s July rate hike. Additionally, the governor softly recognised more financial stability risks may unfold with the unprecedented pace of tightening in global policy rates. In this fast evolving world, it is unlikely the RBI would be too adventurous on either side of rate actions, and is unlikely to precede the Fed in reversing its course of rate hikes in the future.
(3) On domestic front, the MPC has reckoned the recent broad-based decline in inflation, while adding the upside risks, primarily from the manifestation of El Nino and its impact on monsoon. Nonetheless, the inflation forecast has been revised lower by 10bps to 5.1% (Emkay: 4.8%).
Meanwhile, activity data has broadly held up and admittedly, better than the ROW, helping RBI to stay on course with FY24 growth forecast at 6.5% (with upward revision to 1HFY24).
(4) The liquidity stance is largely same as their past guidance, i.e. nimble but vigilant on liquidity evolution – especially as the transient liquidity increase post Rs 2,000 note withdrawal is playing out, apart from the higher RBI dividend.
(5) On net, the MPC tone was balanced amid (i) improving domestic inflation outlook, (ii) improving external sector dynamics, and (iii) ongoing monetary-policy lags of past hikes, offset by (i) still-high inflation vs target and near term monsoon risks and (ii) emerging risks from still-fluid global situation.
We do not see any rate reversal by the RBI in FY24.
Anu Aggarwal, President and Head of Corporate Banking, Kotak Mahindra Bank
"Leaving the policy rates unchanged was expected with inflation cooling down partly due to base effect and partly with oil at $ 70 (compared to $ 115 in June 2022). With global macro anyways pulling businesses down, RBI’s action will provide much-needed support to local demand and growth. I expect interest rate stability will boost Capex plans, the bulk of which has so far been driven by the Government. The multiplier effect of Investment spending is much higher than that of Consumption spending.”
Nilesh Shah, MD, Kotak Mahindra Asset Management Company Ltd
The RBI is reminding of greatest opening batsman Sunil Gavaskar. Standing without fear in front of a challenging global environment. Taking a fresh stance after scoring a century on a challenging wicket to reassure everyone that Mai Hoon Na. Indian economy is ideally balanced between Growth and Inflation under the RBI’s navigation. Market will be pleasantly surprised if the GDP growth for FY 24 comes as per the expectations of the RBI at 6.5 %
Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers
Today's policy rate pause by the RBI was anticipated. In the wake of a greater-than-anticipated decline in inflation in the recent past, it was anticipated that the monetary policy would shift from a liquidity withdrawal to a neutral stance. However, the MPC has decided to maintain the current stance by a majority vote. This is due to the fact that the demonetization of Rs. 2,000 banknotes has significantly contributed to the recent increase in liquidity. In addition, RBI's projections indicate that RBI's inflation target of 4% will be exceeded each month of the current fiscal year. While the continuation of the RBI's policy stance is somewhat disappointing, the central bank's cautious approach in light of upside risks, such as the potential impact of El Nino on India's monsoon and the continuation of monetary tightening by the world's major central banks, appears justified and well-articulated. Therefore, we anticipate that the monetary policy announcement will have no effect on the financial markets.
RBI Monetary Policy LIVE Updates: Reactions - Suvodeep Rakshit, senior economist, Kotak Institutional Equities
"RBI staying on a pause and maintaining its stance was in line with expectations. The RBI remains cautious on the inflation trajectory especially as inflation will remain above the 4% target for the foreseeable future. The RBI continues to estimate average inflation slightly above 5% for FY2024 and retained GDP growth at 6.5%. We believe there are some downside risks to growth. We believe that rate cuts will be contingent on significant divergence in growth-inflation prospects. We maintain our call that the RBI will be on an extended pause."
RBI Monetary Policy LIVE Updates: Reactions - VK Vijayakukar, Chief Investment Strategist at Geojit Financial Services
"Even though the MPC’s rate decision and stance have come on expected lines as pause and withdrawal of accommodation respectively, the Governor’s commentary can be interpreted as positive. The central bank’s projection of FY24 CPI inflation has come at 5.1%, lower than 5.2% projected in the previous meeting. This indicates that the MPC has come to the end of this rate hiking cycle.
If the monsoon is normal and the global scenario is favourable, the MPC may think about a rate cut by end CY2023 or early 2024. From the stock market perspective, this is positive.
The Governor’s remark that “India’s economic and financial sector remains resilient amidst global turmoil” is a reflection of India’s strong and improving fundamentals."
RBI Monetary Policy LIVE Updates: Top 10 takeaways from Governor Shaktikanta Das' speech
-- Headline inflation on a downward trajectory, seen above 4% in FY24
-- Will further act as required to anchor inflation expectations
-- Avg liquidity in surplus mode, could increase as Rs 2k note get deposited
-- Rural demand on revival path; domestic demand supportive of growth
-- Conditions favourable for capex cycle to gain momentum
-- Headwinds from weak demand, global volatility, risk of El Nino
-- Real GDP for FY24 seen at 6.5%
-- Real policy rate continues to be positive
-- CAD expected to have moderated further, should be manageable in FY24
-- Need to maintain Arjuna's eye on evolving inflation situation
RBI Monetary Policy LIVE Updates: MPC retains repo rate at 6.5%, sounds caution on inflation
Since May 2022, the RBI has hiked the repo rate by 250 basis points to counter inflationary pressure, though high inflation, which has remained a key concern for policymakers, has begun cooling off in recent months... Read More
RBI Monetary Policy LIVE Updates: Reactions - Aalesh Avlani, Founder, Credit Wise Capital
"With inflation numbers down by 90 bps compared to last month, GDP growth on the upward trend - we all expected the rate to be unchanged.
A slightly aggressive stance of reducing the rate would have been appreciated to fuel growth. However, macro policies are aligned with the GDP estimates and that is something to cheer on. One can sense the optimism and it’s a good time to build in India."
RBI Monetary Policy LIVE Updates: RBI will be watchful
We need to move towards our inflation target of 4%. Reserve Bank will remain watchful and proactive in dealing with emerging risks: Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates: RuPay forex cards
Banks can now issue RuPay pre-paid forex cards: Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates: Improve credit penetration
To issue guidelines on default loss guarantee arrangement in digital lending for orderly development of the eco-system and improve credit penetration: Governor Shaktikanta Das
Key highlights so far from the MPC review:
— GDP projection for in FY24 stays unchanged at 6.5 percent, says RBI Governor Das
— Headline inflation is still above target and is expected to remain so according to our projections
— MPC decided by a majority of five out of six members to remain focused on withdrawal of accommodation
— Indian economy and financial sector stand out as resilient. Domestic macro fundamentals are strengthening.
— Pace of global economic activity to decelerate due to geopolitical situation.
RBI Monetary Policy LIVE Updates: Key highlights so far from the MPC review
The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Thursday (June 8) kept the policy repo rate unchanged at 6.5 percent... Read More
RBI Monetary Policy LIVE Updates: Liquidity management
To provide greater flexibility in liquidity management, scheduled commercial banks excluding small finance banks can now set their own limits for borrowing in call and notice market within the prudential limits: Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates: Market LIVE Update
Indian benchmark indices extended the opening gains and trading near the day's high level after MPC decided unanimously to keep policy rate unchanged.
The Sensex was up 154.53 points or 0.24% at 63,297.49, and the Nifty was up 43.40 points or 0.23% at 18,769.80.
RBI Monetary Policy LIVE Updates
: Rupee
Indian rupee has remained stable since January 2023. India’s foreign exchange reserves stood at $595.1 billion as on June 2: Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates: Current account deficit
Current account deficit is expected to have moderated further and should be eminently manageable in 2023-24: Governor Shaktikanta Das
Market Alert:
Sensex 272.93 points away from record high amid RBI MPC announcement
RBI Monetary Policy LIVE Updates: Will remain nimble
RBI will remain nimble in its liquidity management. RBI will ensure orderly completion of the government’s borrowing programme: Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates: Inflation forecast
Risks to CPI inflation forecast evenly balanced. Let me emphasise that inflation remains above the 4% target and just being the 2-6% is not enough: Governor Shaktikanta Das
RBI Monetary Policy LIVE Updates: Governor Shaktikanta Das announces CPI Inflation forecast
-- CPI inflation forecast for April-June 2023 cut to 4.6% from 5.1%
-- CPI inflation forecast for July-September 2023 cut to 5.2% from 5.4%
-- CPI inflation forecast for October-December 2023 retained at 5.4%
-- CPI inflation forecast for January-March 2024 retained at 5.2%
RBI Monetary Policy LIVE Updates:
A durable disinflation in core inflation would be critical for a sustained alignment of the headline inflation with the target. CPI inflation forecast for 2023-24 cut to 5.1% from 5.2%: Governor Shaktikanta Das
