LIVE BLOG
Economic Times | 06 Apr, 2023 | 11:45AM IST
RBI MPC Meet LIVE Updates: RBI keeps repo rate unchanged in surprise move; Inflation seen at 5.2% in FY24
RBI MPC Meeting LIVE Updates: The Reserve Bank of India on Thursday hit the pause button and decided to keep key benchmark policy rate at 6.5 per cent even as inflation is trending above its tolerance level.
The rate hike has been paused after six consecutive rate increases aggregating to 250 basis points since May 2022.
Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) will not hesitate to take action in the future.
While keeping the interest rate intact, Das said core inflation remains sticky.
Core inflation generally refers to inflation in manufactured goods.
Retail inflation in February stood at 6.44 per cent compared to 6.52 per cent in the previous month. MPC takes into account retail inflation numbers for setting the interest rates.
However, inflation is expected to moderate in the current fiscal. Many institutions, including the World Bank and Asian Development Bank, have predicted that inflation would cool down to about 5 per cent this financial year.
For the next fiscal, RBI projected a growth rate of 6.5 per cent as compared to 6.4 per cent estimated in February. In the latest Economic Survey of the finance ministry, growth was projected at 6-6.8 per cent for 2023-24.
Last month, the US Federal Reserve announced another 25 basis points interest rate hike to tame inflation.
With the hike, the Fed has increased the federal funds rate from nearly zero in March 2022 to a range of 4.75-5 per cent.
The European Central Bank and Bank of England have also hiked their benchmark rates.
The rate hike has been paused after six consecutive rate increases aggregating to 250 basis points since May 2022.
Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) will not hesitate to take action in the future.
While keeping the interest rate intact, Das said core inflation remains sticky.
Core inflation generally refers to inflation in manufactured goods.
Retail inflation in February stood at 6.44 per cent compared to 6.52 per cent in the previous month. MPC takes into account retail inflation numbers for setting the interest rates.
However, inflation is expected to moderate in the current fiscal. Many institutions, including the World Bank and Asian Development Bank, have predicted that inflation would cool down to about 5 per cent this financial year.
For the next fiscal, RBI projected a growth rate of 6.5 per cent as compared to 6.4 per cent estimated in February. In the latest Economic Survey of the finance ministry, growth was projected at 6-6.8 per cent for 2023-24.
Last month, the US Federal Reserve announced another 25 basis points interest rate hike to tame inflation.
With the hike, the Fed has increased the federal funds rate from nearly zero in March 2022 to a range of 4.75-5 per cent.
The European Central Bank and Bank of England have also hiked their benchmark rates.
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RBI MPC Meet LIVE Updates: RBI to maintain an extended pause?
RBI’s unexpected pause comes despite the previous readings being elevated above 6%. Given today’s policy decision, we expect the RBI to maintain an extended pause and evaluate the lagged impact of previous rate hikes and global uncertainties on growth -inflation dynamics: Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank
RBI MPC Meet LIVE Updates: Unchanged repo rates a boon for the housing market
Much against general expectations, the RBI decided to keep the repo rates unchanged at 6.5% today. This is indeed good for the residential real estate market, which faces a tough road ahead amid massive layoffs by large corporates the world over. India is not decoupled from global economic dynamics and their invariable impact on the housing uptake here. The RBI’s decision to keep the repo rates unchanged comes as a welcome respite to homebuyers, said Anuj Puri, Chairman, ANAROCK Group.
This particularly gives relief to affordable and mid segment homebuyers who feared a possible rate hike today, making property buying via home loans even harder, he added.
This particularly gives relief to affordable and mid segment homebuyers who feared a possible rate hike today, making property buying via home loans even harder, he added.
RBI MPC Meet LIVE Updates: A wait-and-watch approach to assess the impact of the sharp policy tightening already delivered
Enough (tightening) might be enough was the overarching message from the RBI in the April meeting. We were out of consensus in forecasting that the RBI would pause and keep stance at ‘withdrawal of accommodation’ – which is exactly what was delivered, said Aurodeep Nandi, Economist and Vice president, Nomura.
In our view, this reflects a forward looking monetary policy that takes into cognisance elevated global growth risks, moderating inflation trajectory, and the need to wait-and-watch and assess the impact of the sharp policy tightening already delivered, he added.
In our view, this reflects a forward looking monetary policy that takes into cognisance elevated global growth risks, moderating inflation trajectory, and the need to wait-and-watch and assess the impact of the sharp policy tightening already delivered, he added.
RBI MPC Meet LIVE Updates: RBI’s surprise pause likely to support low income, affordable housing
“India Inc lauds the pause in rate hike cycle decision herald by RBI in contrast to the world banks. This act of relief will resume confidence in the homebuyers’ sentiment and boost demand rally in the real estate sector…Additionally, devising innovative flexi or step-up EMI policy by the banks and FIIS will be conducive for the market players to onboard new home buyers in the high interest rate regime,” said Niranjan Hiranandani, vice chairman, realty developers’ body NAREDCO - National.
RBI MPC Meet LIVE Updates: 'RBI astonished the market'
The RBI astonished the market by pausing policy rates; nonetheless, there was some talk about this unexpected statement, which keeps it ahead of other major central banks across the world. When symptoms of growing inflation first appeared, the RBI was one of the few central banks to begin raising interest rates. As a result, this RBI approach can be interpreted as an indication that global interest rates are about to peak. The market is in a good mood, and this policy provides us with further cause to rejoice, said Santosh Meena, Head of Research, Swastika Investmart Ltd.
However, given that we have witnessed a good recovery from recent lows and that we have a long weekend and a weekly expiry, some profit-taking or consolidation cannot be ruled out, he added.
However, given that we have witnessed a good recovery from recent lows and that we have a long weekend and a weekly expiry, some profit-taking or consolidation cannot be ruled out, he added.
RBI MPC Meet LIVE Updates: Enhancing efficiency of regulatory processes
At present, processes for entities to apply for licences, authorizations and regulatory approvals take place in online and offline modes. In order to simplify, there will now be a secure web-based centralized portal for such processes. The web-based portal will show time limits for deciding on applications, will bring greater efficiency in regulatory processes and facilitate ease of doing business for regulated entities, said RBI Governor.
RBI MPC Meet LIVE Updates: Onshore non-deliverable derivative market
Banks in India with IFSC Banking Units were permitted to transact in Indian rupee Non-deliverable forex derivative contracts with non-residents & with other eligible banks having IBUs. Banks with IBUs shall now be permitted to offer Non-deliverable Forex Derivative Contracts involving Indian rupee, to resident users in onshore market. This will further deepen forex market in India and provide enhanced flexibility to residents.
RBI MPC Meet LIVE Updates: 'A cautious approach towards economic recovery'
The RBI Governor's announcement regarding the projection of inflation and GDP growth for FY24 shows a cautious approach towards the country's economic recovery. The focus on the gradual and sustainable "withdrawal of accommodation" is essential for ensuring that the current growth momentum is maintained in the long run. The decision to maintain the repo rate unchanged is a positive sign for the banking and NBFC sectors, and it is expected to benefit other sectors such as real estate and infrastructure: Sonam Srivastava- Founder at Wright Research- an investment advisory firm
RBI MPC Meet LIVE Updates: While Indian financial system is in good shape, let’s “be not slack and be diligent”, says Uday Kotak
Monetary policy: Focus on Financial Stability. Rate pause without change in stance. Global banking fragility on eve… https://t.co/oLjUlHLeLz
— Uday Kotak (@udaykotak) 1680757372000RBI MPC Meet LIVE Updates: Centralised web portal for unclaimed deposits
Depositors of unclaimed bank deposits have to now go through websites of multiple banks to search for such deposits. The new web portal will enable search across bank accounts, widening access of depositors to info on such deposits. The centralized web portal will help depositors and beneficiaries in getting back their unclaimed deposits, informed RBI Governor.
RBI MPC Meet LIVE Updates: Expanding the UPI footprint
RBI has permited operation of pre-sanctioned credit lines at banks to widen and expand footprint of UPI.
RBI MPC Meet Live Updates: Meanwhile, bond yields crash as RBI keeps rates unchanged
Government bond yields dropped on Thursday, with the benchmark bond yield crashing to its lowest in nearly seven months after the Reserve Bank of Indian maintained status quo on policy rates. The 10-year benchmark bond yield dropped to 7.1469%, its lowest since Sept. 15, immediately after the policy decision. It was ay 7.2857% before the decision.
RBI MPC Meet LIVE Updates: Das on liquidity management
RBI will continue to adopt a nuanced and agile approach to liquidity management, said Governor Shaktikanta Das. The central bank will remain flexible in meeting productive requirements of the economy, as well as use two-way operations as may be necessary. The RBI will complete the government’s borrowing programme in a non-disruptive manner, RBI Guv said.
RBI MPC Meet LIVE Updates: CAD expected to remain moderate in fourth quarter of FY23
India's current account deficit for the first three quarter of FY23 stood at 2.7% of GDP, informed RBI Governor Shaktikanta Das. India's current account deficit is expected to remain moderate in the fourth quarter of FY23 and also in FY24 at a level, which is viable and eminently manageable.
RBI MPC Meet LIVE Updates: A new centralised web portal for public to search unclaimed deposits
RBI MPC Meet LIVE Updates: RBI Governor on Rupee
The rupee has moved in an orderly manner in 2022 and continues to remain so in 2023, said RBI Governor Shaktikanta Das. "We remain watchful and focussed on maintaining the stability of Indian rupee."
RBI MPC Meet LIVE Updates: War against inflation has to continue, says RBI Guv
While we have kept the policy rate unchanged, this decision was taken based on our assessment of the macroeconomic and financial conditions with reference to information available upto today. Our job is not yet finished and war against inflation has to continue until durable decline in inflation closer to target is seen, said RBI Guv.
RBI MPC Meet LIVE Updates: RBI believes that its stance still reflects accommodation, says Das
Meanwhile, Rupee falls below 82/USD after RBI hits pause on rate hikes
RBI MPC Meet LIVE Updates: Inflation for FY24 projected at 5.2%
RBI MPC Meet LIVE Updates: GDP growth break-up
- Q1-7.8%
- Q2- 6.2%
- Q3-6.1%,
- Q4- 5.9%
RBI MPC Meet LIVE Updates: Real GDP growth for FY24 projected at 6.5%
RBI MPC Meet LIVE Updates: India's economic activity remains resilient, with real GDP growth expected at 7% in FY23, says Das
- Headline inflation remains well above central bank targets
- Banking and NBFC sectors in India remain healthy
RBI MPC Meet LIVE Updates: Bank failures and contagion risks have brought financial stability to the forefront, says Das
RBI's repo remains unchanged at 6.5%
The MPC is ready to act if necessary, RBI Governor Shaktikanta Das said, even as the rate-setting committee remained focused on withdrawal of accommodation.
RBI MPC Meet LIVE Updates: 2023 began on a good note, says RBI Guv Das
RBI MPC Meeting Live: Factors affecting rates
The two key factors which the committee is expected to deliberate intensely while firming up the next monetary policy are elevated retail inflation and the recent action taken by central banks of developed nations especially the US Federal Reserve, the European Central Bank and Bank of England.
RBI MPC Meeting Live: Here are the key numbers on Das & co's table for policy decision
- Growth:
- Inflation:
- Forex Reserves:
- Trade Deficit:
- Rupee movement:
RBI MPC Meeting Live: India's forex kitty
India's foreign exchange reserves rose $5.98 billion to an over eight-month high of $578.78 billion as on March 24, 2023.
RBI MPC Meeting Live: At inflection point
ET Poll: Economists said the monetary policy is at an ‘inflection point,’ with a pause the most likely outcome after the April policy
MPC Meeting Live: 'RBI might step in to thaw conditions via ad hoc variable repo rate ops'
"While the central bank might step in to thaw conditions via ad hoc variable repo rate operations, preference will be to keep the net liquidity balance close to non-inflationary neutral or slight deficit, with relief expected by way of government spending or likely return in portfolio inflows," said Radhika Rao, senior economist at DBS Group Research.
RBI MPC Meeting Live: Banking system liquidity
Banking system liquidity has improved in recent days after having been in deficit towards the end of March. Liquidity surplus stood at 2.11 trillion rupees on Wednesday, its highest since Sept. 5 and more than double the 1.04 trillion rupees surplus in the previous session.
RBI MPC Meeting Live: Little change in bond yields
Government bond yields are expected to be little changed in the early session on Thursday, said Reuters. The 10-year benchmark 7.26% 2032 bond yield is expected to be in the 7.26 to 7.30% range till the policy decision, after closing at 7.2750% on Wednesday.
MPC Meeting Live: RBI's stance
The Reuters Poll showed that a majority of respondents, 20 of 36, expect the central bank would maintain its 'withdrawal of accommodation' stance while the remaining 16 said it would shift to neutral.
RBI MPC Meeting Live: A pause?
"Risk management considerations mean that MPC will opt for a pause in April," A Prasanna, head of research at ICICI Securities Primary Dealership told Reuters. The committee will retain its option to hike later by maintaining its phrase 'withdrawal of accommodation', he said, essentially holding on to its tightening bias.
RBI MPC Meeting Live: A look at composite PMI output
The S&P Global India Composite PMI Output Index -- which measures combined services and manufacturing output -- fell from 59.0 in February to 58.4 in March. Private sector sales rose for the 12th consecutive month in March, amid sustained increases at goods producers and service providers. "The overall pace of expansion was sharp, despite easing from February," the survey said.
RBI MPC Meeting Live: India's services sector growth
India's services sector growth moderated in March after hitting a 12-year high in February, as new business orders increased at a softer rate. The seasonally adjusted S&P Global India Services PMI Business Activity Index eased from 59.4 in February to 57.8 in March, indicating a slower rate of expansion.
RBI MPC Meeting Live: What's driving another hike?
"The need for another rate hike is driven by the elevated level of core inflation which has remained near or above 6% since middle of 2021," Gaura Sen Gupta, an economist with IDFC FIRST Bank told Reuters.
RBI MPC Meeting Live: Core inflation
Core inflation, which excludes volatile food and energy components, was also expected to have stayed high between 6.05%-6.12% in February, according to estimates from three economists. Unseasonal rains could keep food prices high and a surprise decision by OPEC and its allies to cut output recently has also pushed up oil prices which could add to imported inflation.
RBI MPC Meeting Live: Inflation woes
Retail inflation jumped 6.44% year-on-year in February, easing from 6.52% in January but has remained above the central bank's mandated target range of 2%-6% for 10 out of the last 12 readings.
RBI MPC Meeting Live: A seven-year high rate?
A large majority of economists, 49 of 62, told Reuters that RBI would lift its repo rate by 25 basis points to a seven-year high of 6.75% at the conclusion of its three-day meeting on April 6. The central bank has already raised rates by 250 basis points since May last year.
RBI MPC Meeting Live: A 250 bps cycle
RBI has already increased the repo rate by a total of 250 basis points since May in a bid to contain inflation though it has continued to remain above the central bank's comfort zone of 6 per cent for most of the time.
RBI MPC Meeting Live: A rate action followed by a prolonged pause?
Nine of 10 economists polled by ET ahead of policy announcement expect a 25-bps increase. RBI's rate action is expected to be followed by a prolonged pause, with some respondents anticipating no further rate action for the remainder of FY24.
RBI MPC: Fighting inflation
Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
RBI MPC Meeting Live: A look at previous hikes
In February RBI raised rates by 25 basis points, in December by 35 bps, and sharp 50 bps rate hikes in each of the three meetings in June, August and September.
RBI MPC Meeting Live: The bi-monthly review meet
RBI started its first bi-monthly review of the new financial year with its Monetary Policy Committee meeting on April 3, April 5 and April 6. The central bank has six bi-monthly reviews of its monetary policy in a year. And, there are out-of-cycle reviews in which the central bank conducts additional meetings in times of emergency.
RBI MPC Meeting Live: Another rate hike on cards?
India's Central bank is expected to announce the hike in benchmark interest rate -- repo rate -- on Thursday after a three-day meeting of its Monetary Policy Committee. RBI Governor Shaktikanta Das will announce the outcome of the meetings at 10 am, followed by a press conference at noon.