The monetary policy committee voted to keep the benchmark repurchase rate at 4 percent and retained its “accommodative” stance. The RBI raised its annual inflation forecast to 5.7 percent from 4.5 percent, which analysts say indicates a rate hike in coming months.
The time has come to replace the weighted average call money rate with the general collateral overnight repo rate as the operating target of monetary policy
In an interview with CNBC-TV18, C Venkat Nageswar, Deputy MD, SBI, talked about the impact of the RBI's move to open up the corporate bond market and what this would mean for banks.
In the monetary review, RBI has maintained status quo position on all policy rates. Inflationary concerns appears to be the driving factor though the RBI has stated that the rate will remain below 6% by January based on current expectations. Expect 25 bps cut in Q3 of the year, says CARE Ratings.
CARE Ratings has come out with its report on RBI's Monetary Policy. The rating agency foresee a 50 basis points cut in the repo rate in FY16, the same is unlikely to be seen till June '15, says the report.
Encouraged by softening inflation and fiscal consolidation roadmap presented by the government, the Reserve Bank of India on Wednesday slashed key policy (repo) rate by 0.25 percent to 7.5 percent, the second such surprise rate cut outside the regular policy review in less than two months.
CARE Ratings expects RBI to reverse its policy stance by lowering the repo rate in the next policy in February 2015 and start reducing the repo rate by 25 bps to begin with.
The gravest risk to the value of the rupee is from CPI inflation which remains elevated at close to double digits, despite the anticipated disinflation in vegetable and fruit prices.
According to CRISIL Research, as per the monthly numbers released by the Association of Mutual Funds in India (AMFI), the Indian mutual fund industry‘s month-end assets under management (AUM) rose 7 percent to a record high of Rs 8,90,000 crore in November.
25 bps repo rate hike is unlikely to translate to base rate hikes, says Romesh Sobti, MD & CEO, IndusInd Bank. Though it would mean elevated rates of lending, elevated rates of borrowing for atleast the next two quarters.
Worsening price situation may prompt the Reserve Bank to raise interest rate by 0.25 percent in its policy review on Tuesday, but it is also likely to announce some liquidity easing steps.
ICRA expects the RBI to intervene and address tightness in systemic liquidity in the next quarter through open market operations (OMOs) as the Central Bank ruled out any further relaxation in the daily CRR requirement.
The Reserve Bank of India‘s (RBI‘s) surprise 25bps repo rate hike to 7.50 percent on September 20 policy meeting indicates that the new RBI governor is focusing more on inflation than growth.
Post the RBI policy announcement, both the Sensex and the Nifty plummeted, but Nirmal Jain of IIFL feels the reaction is more kneejerk than anything to do with the repo rate hike by 25 bps. Going forward, he feels the market will have a positive bias with more foreign money coming into Indian equities on global cues.
There is not much room for the RBI to ease policies in the near-term. If some of the pressures on the currency were to dissipate and if inflationary pressures ease a bit, then there might be a rate cut in September or October.
The rupee will open stronger, but thereafter much will depend on what view foreign institutional investors (FIIs) in the market take of RBI's steps, sayd CNBC-TV18's Latha Venkatesh.
Just a week ahead of its first quarter monetary policy, the central bank tweaked some borrowing measures by banks, which is likely to make money costlier by raising demand for rupee.
The Reserve Bank of India (RBI) on Wednesday allowed banks, a special dispensation to borrow up to Rs 25,000 crore. Lenders can lend the same to mutual fund houses, which are facing redemption pressure on their debt schemes due to sudden spurt in bond yields.
Morgan Stanley says with economic growth refusing to pick up, higher rates will be negative for banks. State Bank of India, Punjab National Bank, Bank of Baroda, Axis Bank, ICICI Bank and HDFC Bank fell 3-6 percent.
Deutsche Bank's Taimur Baig believes the RBI does not want to destabilise growth sentiments at the expense of stabilising rupee due to which there may not be much movement in policy rates in the short-term.
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The Reserve Bank of India (RBI) is unlikely to reduce the policy (repo) rate in its mid quarter monetary policy to be announced on June 17. The depreciating rupee would be the key trigger behind such action. The fear of imported inflation may resist the central bank from taking any dovish stance.
The Reserve Bank of India is wary that open market operations (OMOs), where it buys bonds from the secondary market, is only helping banks to earn profits without stepping up lending activity, which would spur an economy growing at its weakest in a decade.
At the onset of the new financial year (2013-14), bank borrowings from RBI dropped sharply on Thursday to about Rs 52,100 crore as against a high of Rs 1.75 lakh crore recorded on March 28, FY13. The new low is also below the central bank's comfort zone for liquidity currently stood at around Rs 68,000.