Reserve Bank Governor Shaktikanta Das on Wednesday said the country is at the doorstep of economic revival on the back of accommodative monetary and fiscal policies being pursued by the central bank and the government.
WPI-based inflation falls to 5-month low of 6.16%.
These are the highlights of RBI Governor Shaktikanta Das's statement and resolution of the Monetary Policy Committee (MPC):
Focus on inflation, higher CPI projection dampen bond market mood.
Shaktikanta Das is a master of the finest balancing act who listens to all but takes his own decisions, discovers Tamal Bandyopadhyay.
The Reserve Bank of India (RBI) will maintain the policy repo rate at 6.5 per cent during its upcoming June 8 announcement, considering the easing of retail inflation in April and the potential for further decline, indicating the effectiveness of previous policy rate actions, anticipate experts. Headed by Reserve Bank Governor Shaktikanta Das, a meeting of the six-member Monetary Policy Committee (MPC) is scheduled for June 6-8. The decision of the 43rd meeting of the MPC would be announced on Thursday, June 8.
A likely easing in inflationary pressures in the forthcoming months will reopen the window for the RBI to once again prioritise growth and ease its interest rates.
Fresh dollar demand from importers and some banks on the back of smart rise in the US dollar ahead of RBI monetary policy meeting on Tuesday also weighed on the rupee, said forex dealers.
Snapping its six-day losing streak both benchmarks rallied over 1% after RBI kept key policy rates unchanged.
President-elect Donald Trump's warning that BRICS countries will face 100 per cent tariffs if they choose to move away from the US dollar is unclear to what extent he will carry out his threat, as it remains to be seen if the US laws permit such an action, former RBI Governor Duvvuri Subbarao said on Monday. He also said even for BRICS, there are internal differences about bringing out an alternative to the US dollar.
The apex bank hiked its repo, reverse repo (overnight lending and borrowing rates) to 5.25 per cent and 3.75 per cent, respectively, while the cash reserve ratio, or the portion of deposits banks park with RBI, to 6 per cent in line with analysts' expectations.
From the 30 Sensex firms, Tata Steel, JSW Steel, Power Grid, HDFC Bank, Tata Motors and Larsen & Toubro were the biggest gainers. Hindustan Unilever, Infosys, Bajaj Finance, Axis Bank, Kotak Mahindra Bank and UltraTech Cement were among the laggards.
Similarly, 51 per cent of 105 market participants polled by RBS said they do not expect a CRR cut in the quarterly policy announcement next Tuesday.
RBI unsure whether to cut rates or not in its next monetary policy.
The rupee on Monday plunged by a hefty 52 paise to slip below 54-mark for the first time in five weeks on month-end dollar demand from importers and corporates, amid the much-awaited RBI monetary policy review on Tuesday.
IT and interest rate-sensitive bank, realty, and auto stocks ended with sharp gains.
The Reserve Bank indicated that it would continue with its accommodative policy stance as managing growth and inflation poses a big challenge for the central bank.
Mukherjee said it was not necessary for the RBI governor to consult him before the mid-quarterly review of the credit policy.
The Reserve Bank of India's (RBI's) record surplus transfer to the government has raised hopes among bond traders that the government might reduce its gross borrowing for the current financial year (2024-25/FY25) by up to Rs 1 trillion. The RBI approved a dividend of Rs 2.11 trillion for the central government for 2023-24, marking an increase of roughly 141 per cent from 2022-23 (FY23). In addition, the contingency risk buffer has been raised to 6.5 per cent from the previous 6 per cent.
Investors' wealth soared by Rs 10.58 lakh crore in three days of the market rally, where the BSE benchmark jumped over 2 per cent, and hit an all-time high on Monday. Extending its winning momentum to the third day running, the 30-share BSE Sensex jumped 363.20 points or 0.49 per cent to settle at 74,014.55. During the day, it zoomed 603.27 points or 0.81 per cent to hit its record high of 74,254.62.
The repo rate has been left unchanged at 4 per cent, Governor Shaktikanta Das said while announcing the decisions taken by the central bank's MPC.
Bank lending has seen a significant fall. RBI needs to bring liquidity into the system immediately.
ICICI Bank was the top gainer in the Sensex pack, rising around 4 per cent, followed by UltraTech Cement, Sun Pharma, Bharti Airtel, HUL, SBI, L&T, Axis Bank and IndusInd Bank. On the other hand, Reliance Industries, Bajaj Finserv, HCL Tech and HDFC were among the laggards.
S&P Global Ratings on Tuesday upped India's GDP growth forecast for the current fiscal to 6.5 per cent, citing lower crude prices, monetary easing and normal monsoon, and said the ongoing geopolitical tensions are unlikely to put a "significant pressure" on the rupee or inflation.
'Banks are being encouraged to lend instead of parking their resources with the RBI and earn risk-free interest income,' points out Tamal Bandyopadhyay.
The recently released RBI First Quarter Review of Monetary Policy 2009-10 and the accompanying 'Macroeconomic and Monetary Developments First quarter review 2009-10 have indicated that on the basis of Balance of Payments (BoP) the export growth for 08-09 has declined by over 22% to 5.4% and also the import growth has declined by over 21% during the same period.
The Reserve Bank of India on Wednesday retained its growth projection at 7.2 per cent for the current fiscal on the back of improvement in urban demand and gradual recovery in rural India. Unveiling the third monetary policy for the current fiscal, RBI Governor Shaktikanta Das said the Indian economy remained resilient, and the central bank will continue to support growth. The RBI expects growth in the first quarter of the current fiscal at 16.2 per cent, which will taper to 4 per cent by the fourth quarter.
Equities went into a tailspin on Wednesday after the Reserve Bank surprised the market with a mid-cycle rate hike in a bid to tame soaring inflation.
The SBI report ruled out a October rate hike
'For the RBI, for a central bank, reputational risk is the worst risk.' 'Credibility is the worst risk,'
Terming the timing of monetary tightening by the Reserve Bank as 'a bit of a surprise', country's largest bank SBI today said the apex bank may further hike its key rates in the annual monetary policy on April 20, if inflation remains high in March as well.
Rajan will evolve a policy with the help of professional persons for a national consensus if we have to carry on with implementing social and economic changes in a complex economy.
The country's largest home loan player, Housing Development Finance Corporation, said on Thursday it will not hike interest rates even if the central bank signals an upward movement in the monetary policy on July 27.
Reversal in the declining economic growth trajectory is clearly the need of the hour and all steps should be taken to bring about this change.
FM says government policies aim to contain inflation, spur growth.
The report further noted that inflation is expected to fall to 4.5 per cent by quarter ended March 2017.
RBI has cut policy rate thrice during 2015.
In his first monetary policy review since taking office on September 4, RBI Governor Raghuram Rajan increased the repo rate by 25 basis points to 7.50 per cent.
From the Sensex pack, IndusInd Bank, NTPC, Asian Paints, Hindustan Unilever, JSW Steel, Tech Mahindra, Bajaj Finance, Infosys, Wipro, ICICI Bank, Bajaj Finserv, HDFC Bank and Tata Motors were among the major laggards. HCL Technologies, Power Grid, Titan, Reliance Industries, UltraTech Cement, Tata Steel, State Bank of India and Mahindra & Mahindra were the gainers.
Wholesale inflation in the country rose for the fourth consecutive month in June at 3.36 per cent on account of rise in prices of food articles, especially vegetables and manufactured items. The wholesale price index (WPI) based inflation was 2.61 per cent in May. It was (-) 4.18 per cent in June 2023.
