Our live coverage of the RBI MPC meeting has ended. Thank you for following along with the latest updates on monetary policy. Stay tuned to Moneycontrol for comprehensive analysis and insights on the outcomes and their impact.
RBI MPC Meeting Highlights: The MPC has on August 10 unanimously voted to leave the repo rate unchanged at 6.5 percent, RBI Governor Shaktikanta Das announced today. The Standing Deposit Facility rate is also retained at 6.25 percent; and the Marginal Standing Facility rate, Bank Rate is also retained at 6.75 percent. The MPC has also decided to remain focused on the withdrawal of accommodation with preparedness to act should the situation so warrant.
The Reserve Bank of India's Monetary Policy Committee (MPC), has three members from the RBI and three external members. During the last MPC meeting in June, the repo rate was left unchanged. Today's decision marks the third time rates have been left unchanged. The central bank had earlier raised repo rates by a total of 250 bps since May 2022 with an aim to tackle inflation.
This is the third MPC meeting this fiscal. The MPC consists of three external members and three officials of the RBI. The external members of the panel are Shashanka Bhide, Ashima Goyal, and Jayanth R Varma. Besides Governor Shaktikanta Das, the other RBI officials in MPC are Rajiv Ranjan (Executive Director) and Michael Debabrata Patra (Deputy Governor).
Our live coverage of the RBI MPC meeting has ended. Thank you for following along with the latest updates on monetary policy. Stay tuned to Moneycontrol for comprehensive analysis and insights on the outcomes and their impact.
RBI Deputy Governor T Rabi Sankar: We are happy that a country such as Japan is interested in the UPI. At this stage, our talks with Japan are exploratory in nature.
RBI Governor Shaktikanta Das: Incremental CRR was not the only tool available to us to deal with the liquidity overhang. But we judged it was the best option at the current juncture.
RBI Governor Shaktikanta Das: We are not concerned about any implication of any Russian investment of surplus rupee balance in government securities. We have foreign exchange reserves of more than $600 billion. We are confident of dealing with any situation (outflow) if it arises, but we don’t think it will happen.
RBI Deputy Governor T Rabi Sankar: We can’t provide specific details on how much Russia has invested in Indian government securities. There are certain routes in which it can be done. But there should not be any liquidity impact of these investments.
RBI Governor Shaktikanta Das: We are nimble in our liquidity actions. As and when required, we do fine-tuning operations on both sides – repo and reverse repo. We monitor the situation constantly. Liquidity is a dynamic figure and we can't specify if there is a comfortable level.
RBI Governor Shaktikanta Das: Private investment is happening in some key sectors, such as iron and steel, automobiles, petroleum, metals, and chemicals. Going forward, it should happen in other sectors too because the ground conditions are favourable.
RBI Governor Shaktikanta Das: Internal calculations show that the incremental CRR for scheduled banks will affect liquidity by a little above Rs 1 lakh crore.
RBI Governor Shaktikanta Das: September 8 review of incremental CRR for banks will depend on conditions prevailing at the time. So I don’t want to pre-judge what the review will say. The review can happen even before September 8.
RBI Governor Shaktikanta Das: UPI linkage has been done with Singapore. RuPay cards are used in a few countries. We have signed an MoU with UAE for linking UPI with their fast payments system. It will happen in the coming months. Discussions are on with other countries, including some advanced countries, to link UPI.
RBI Governor Shaktikanta Das: There is excess liquidity that has to be dealt with. But there are periods when there could be liquidity pressure, such as when tax payments are made to the government. But this deficit is temporary and lasts only a few days.
RBI Governor Shaktikanta Das: Financial sector stability is well maintained. The RBI looks forward to co-operation from the players in the sector.
RBI Governor Shaktikanta Das: The incremental CRR was considered necessary in the background of the liquidity overhang. We considered it desirable in the interest of financial and price stability. It will have an impact on inflation also. It is a purely temporary measure.
RBI Governor Shaktikanta Das: The recent spike in CPI inflation is expected to be short-lived going by past trends. In such situations, we need to be watchful and not resort to knee-jerk reactions.
RBI Governor Shaktikanta Das: India is emerging as the new growth engine for the world. In a highly volatile and uncertain world, India is standing out for its resilience and stability.
Mint Road seems staunchly focused on keeping consumer inflation within the 4% target, while standing pat on rates and monetary policy stance. Additionally, the introduction of incremental cash reserve ratio could temporarily harden short-term rates. CPI-based inflation was on a falling trajectory and appeared to have peaked during the June monetary policy review.
But the recent spike in food inflation has created an upside to the RBI’s July-September CPI forecast of 5.2% — a number it now sees rising to 6.2%.
