Both V Srinivasan of Axis Bank and Ashish Parthasarthy of HDFC Bank agree that the withdrawal limit could extend beyond December 30 because the limit depends on the availability of currency.
The RBI stayed prudent in its monetary policy review today rather than move in a haste as it wishes to wait for more information and experience before judging the full effect and persistence of the demonetisation move.
The Reserve Bank of India (RBI) on Wednesday retained its March-end retail inflation forecast of 5 percent, but high oil prices and rising interest rates could have push up domestic prices.
RBI Governor Urjit Patel delivered a status quo on rates that wrong-footed many: A rate cut had been seen as a given, the quantum was the question. That said, there are three positives in a hawkish-looking statement that markets may be discounting.
The RBI has kept in the mind the possible rise in crude prices when keeping the rates unchanged, says Sajjid Chinoy, Economics, JPMorgan. A sudden surge in crude prices could create inflationary pressure on the economy.
Economists at foreign brokerage Bank of America Merill Lynch said however that it doesn't expect any rate cut in the upcoming review of the bi-monthly policy in December.
RBI today reduced the repo rate by 0.25 percent -- the short term rate at which the central bank lends to banks -- to 6.25 percent.
In a move that is expected to lead to lower rates for housing EMIs, car loans and corporate borrowing, the Reserve Bank reduced the short term lending rate (repo rate) by 0.25 percent to 6-year low of 6.25 percent in the fourth bi-monthly monetary policy statement.
The Nifty and Sensex both ended higher than yesterday's close at 8,769 and 28,334 respectively.
In January, Prime Minister Narendra Modi had unveiled a slew of incentives for them including tax holiday, inspector raj-free regime, capital gains tax exemption and Rs 10,000 crore corpus to provide funds. Government has also relaxed procurement norms for them.
"While the RBI has cut the repo rate by 25 basis points, the policy statement remains less dovish in its guidance. It still sees upside risk to inflation target that has to be achieved by March end. While today's rate cut would accentuate the bond rally, I don't see much impact on the bank lending rates."
Strong public investment in roads, railways and inland waterways, and the boost to spending from the 7th Pay Commission‘s award, should improve industrial outlook.
Indranil Pan, Chief Economist at IDFC Bank told CNBC-TV18 the current rate cut was largely data dependent and it is likely future rate actions will also remain so.
Vikas Khemani, President and CEO, Edelweiss Securities said market has got what it wanted - a 25 basis points rate cut, so now the focus will shift back to macros.
RBI governor Urjit Patel will present his maiden monetary policy review amid mixed signals from the broader economy.
The market had already run up substantially and so is likely to consolidate, making investors selective. However, the underlying current still remains bullish and money will continue to flow in, said Nirmal Jain of IIFL.
In an interview with CNBC-TV18, leading bankers, economists and bond and stock market experts talked about the RBI monetary policy, their key takeaways and their outlook on inflation and interest rates ahead.
The RBI, in its bi-monthly monetary policy today, said it expects some upside risk to 5 percentt inflation target by March 2017 mainly on account of the 7th Pay Commission award.
While the direct statistical effect of house rent allowances under the 7th CPC's award may be looked through, its impact on inflation expectations will have to be carefully monitored so as to pre-empt a generalisation of inflation pressures.
The Reserve Bank of India‘s (RBI) decision to leave policy interest rates unchanged today was no surprise to market participants, in line with transparent and predictable monetary policy.
Reserve Bank of India (RBI) Governor Raghuram Rajan, who bows down next month, kept the repo rate unchanged at 6.50 percent at his final policy review on Tuesday after inflation hit a nearly two-year high.
The money market doesn't seem to be in a hurry to get any liquidity and that the bond yields will hover around 7.4 percent, with a plus or minus 5-7 bps at least till August, says Jayesh Mehta, MD & Country Treasurer, Bank of America.
Decoding Raghuram Rajan‘s commentary, Deutsche Bank Chief Economist (Asia, Global Markets Research) Taimur Baig said room for another rate cut is zero as there is an upside in inflation outlook.
In its second bi-monthly policy review for the current fiscal, RBI maintained status quo on interest rate, while pegging economic growth at 7.6 percent and retail inflation target at 5 percent for January 2017.
The RBI left its policy rates unchanged, while cautiously signalling it could cut later this year if monsoon rains, and other factors, dampen upward pressure on food prices.