This is the fourth consecutive time that the RBI has kept key interest rates unchanged despite clamours from the industry to cut rates to boost economy.
The Indian government has extended the Reserve Bank of India's (RBI) mandate to maintain retail inflation at 4 per cent, with a tolerance band of 2 per cent on either side, for another five years until March 2031.
'...A new challenge has emerged in the form of Mythos.'
The government on Monday appointed three eminent economists Ashima Goyal, Jayanth R Varma and Shankanka Bhide as members of the rate-setting Monetary Policy Committee of the RBI
Uncertainty is emerging as the only certainty, said RBI Governor Shaktikanta Das as he emphasised on continued policy support at the December MPC meet during which members expressed concerns over spread of the Omicron variant of coronavirus, as per the minutes of the rate-setting panel released on Wednesday. After three days of deliberations, the six members of the Monetary Policy Committee (MPC) on December 8 unanimously voted for status quo on policy rates for the ninth consecutive time. At the meeting, the RBI Governor said risks stalking the global economy have amplified with rapid spread of the virus mutations, including the Omicron variant, leading to countries scrambling for restrictions.
Weighed down by a weak rupee, the Reserve Bank on Tuesday chose to keep all key interest rates unchanged and asked the government to take urgent steps to reign in the high current account deficit.
RBI's previous monetary policy was announced on September 29.
The Indian rupee saw a significant appreciation against the US dollar following President Trump's suspension of military strikes against Iran and the Reserve Bank of India's decision to maintain its key interest rate. Market sentiment was further buoyed by positive comments from the RBI regarding the health of the banking sector.
Reserve Bank Governor Sanjay Malhotra on Friday said the key policy rates will remain at low levels for a long period and may go down even further.
The consumer price index (CPI)-based inflation hitting an all-time low in October would encourage the six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI) to cut the policy repo rate in its upcoming December 3-5 meeting. However, the July-September GDP growth, expected to be above 7 per cent, may act as a deterrent.
After a 25 basis point rate cut in December, the RBI on Friday decided to pause on the policy rate front amid geopolitical uncertainties.
The Reserve Bank of India on Friday said it will come out with its annual monetary policy for the next fiscal on April 20, amid expectations that the central bank will hike interest rates to tame the rising inflation
RBI Governor Raghuram Rajan has been pursuing hawkish monetary policy stance to keep inflation under check.
The chances of ending the current fiscal year at anywhere near the 5.5 per cent that RBI officially targets seem bleak indeed.
This time the all-powerful interest-rate setting panel, whose constitution was notified by the government on Thursday, will take call on interest rate. But that's not the only change. The Reserve Bank of India has also decided to change the timing of announcement of its policy review, due next Tuesday, to mid-afternoon.
The central bank is yet to consider actions such as a rate hike or mobilising dollar inflows from non-resident Indians to boost forex reserves as it cannot afford to continue with them for long when the rupee's internationalisation tops its agenda, explains Tamal Bandyopadhyay.
The RBI has hiked repo or short-term lending rate up by 0.25 pc to 7.75 pc.
India Ratings and Research predicts the Reserve Bank of India (RBI) will maintain the repo rate at 5.25 per cent throughout FY27, despite potential inflationary pressures from higher fuel prices, with inflation expected to remain within the central bank's tolerance band.
"It is quite possible that the rates will remain low in the near to medium term, but that will depend on how conditions evolve," said RBI Governor Sanjay Malhotra.
Following are the highlights of the RBI's first monetary policy statement of 2022-23 unveiled by Governor Shaktikanta Das: Policy repo rate unchanged at 4%; marginal standing facility rate & bank rate too remain unchanged at 4.25%. Monetary stance to be accommodative with focus on withdrawal of accommodation to keep inflation within target. GDP growth projection for FY'23 slashed to 7.2% from 7.8%; growth projections based on assumption of crude oil (Indian basket) price at $100 a barrel during FY'23. Inflation forecast hiked to 5.7% for FY'23 from 4.5%.
With inflation turning negative, industry has been demanding interest rate cuts to propel demand. However, RBI Governor D Subbarao had said there is no threat of deflation as food and crude oil prices are still firm.
The RBI's monetary policy committee is expected cut benchmark interest rate by 25 basis points in its policy review meeting next month to push growth, India Ratings and Research (Ind-Ra) said on Thursday. "We expect the headline inflation in FY25 to cool off to 4.7 per cent. Monetary easing may be limited to 75 bps in FY26," Ind-Ra Chief Economist and Head Public Finance, Devendra Kumar Pant said.
The Reserve Bank of India (RBI) and the central government have introduced a package of measures, including tax exemptions for FPIs on government securities and a concessional foreign-exchange swap facility, aiming to attract up to $50 billion in foreign capital. This initiative is designed to strengthen India's balance of payments and potentially cover the projected BoP gap for FY27.
he government in its budget for 2009-10 proposed to raise Rs 4.5 lakh crore (Rs 4.5 trillion) from the market, up from Rs 3.1 lakh crore (Rs 3.1 trillion) in the previous year and pegged the fiscal deficit at 6.8 per cent of the GDP as against 6.2 per cent in 2008-09.
Supporting Reserve Bank's hawkish stance on monetary policy, Finance Minister Pranab Mukherjee on Tuesday said the increase in the key rates was necessary to contain inflation.
Inflows from Europe, falling crude oil to come to the rescue if rupee cracks against the dollar.
India's wholesale price index (WPI) inflation surged to 9.68 per cent in May, up from 8.26 per cent in April, primarily due to significant increases in the prices of fuel and power, manufactured goods, and food items.
The RBI cut the rate several times last year to reduce it by 125 basis points to the current 6.75 percent.
The Reserve Bank has reduced interest rate by 150 bps since January 2015.
Retail inflation was at a 25-month low of 8.1 per cent in February.
The inflation target of the RBI would be reviewed once every five years.
Former Reserve Bank of India governor Yaga Venugopal Reddy said he would have preferred a tighter monetary policy as managing inflation and inflationary expectations were crucial to keep the economy growing.
FM P Chidambaram has endorsed RBI's monetary policy. He expressed concerns about the gap in India's and the US' interest rates and will discuss it with RBI's Governor Y V Reddy.
Strong domestic growth will continue to draw foreign investment into the Indian economy, Reserve Bank of India (RBI) Governor Sanjay Malhotra said on Tuesday. He said this was reflected in recent free trade agreements and investment commitments by large technology companies.
Indian stock market benchmark indices Sensex and Nifty experienced a significant decline, driven by escalating tensions in the Middle East and rising crude oil prices.
'Rate cut looks unlikely and there is reason to believe that the cycle is over.'
The Reserve Bank of India (RBI) has projected a 6.9 per cent GDP growth for the current financial year, citing concerns over commodity prices and supply chain disruptions stemming from the West Asia crisis.
The RBI seems to be acknowledging that all deposits are not equal -- a deposit with a lower run-off assumption is inherently more valuable than one that could disappear overnight, points out Tamal Bandyopadhyay.
The Reserve Bank of India (RBI) has projected that crude oil prices will average USD 85 per barrel and the rupee will weaken to 94 against the dollar by FY27, according to its bi-annual Monetary Policy report.
Shrugging off concerns over the depreciation of rupee, the RBI has cut interest rate by 25 basis points to 5.25 per cent in a bid to further bolster economic growth, which rose to a six-quarter high of 8.2 per cent in the second quarter of the current financial year.
