Headed by Urjit Patel, MPC for the fourth straight time kept the repo rate unchanged, at which it lends to the banks, at 6.25 per cent. The reverse repo, at which RBI borrows, will be 6 per cent.
Retail inflation crossed the RBI's comfort level and rose to 5.21 per cent in December on increase in prices of food items.
The economic growth is likely to moderate to 6.1 per cent, slowest in over seven quarters, from 6.6 per cent last year same period.
The RBI on Friday retained inflation forecast for FY23 at 6.7 per cent amid uncertain price trajectory on "geopolitical shocks" and on hope that inflationary pressures would ease with pick-up in kharif sowing and supply chain improvements. In its previous monetary policy review in June, it had projected retail inflation for 2022-23 at 6.7 per cent, higher from 5.7 per cent forecast in April. The six-member Monetary Policy Committee (MPC) unanimously decided to raise the benchmark repo rate by a steep 50 basis points to 5.40 per cent with immediate effect to tame inflation while supporting growth.
"We expect GDP growth to slow from 7.3 per cent year-on-year in July-September 2016 to 6.0 per cent in October-December 2016 and 5.7 per cent in January-March 2017," Nomura said in a research note.
India's exports contracted by 22 per cent, the steepest decline in the last three years, to $32.97 billion in June on account of global demand slowdown, especially in the Western markets like the US and Europe. According to the data of the commerce ministry, the trade deficit in June stood at $20.3 billion against $22.07 billion in the same month last year due to a fall in exports and imports. The inbound shipments during the month under review declined by a steep 17.48 per cent to $53.10 billion.
Private sector output in India expanded for the first time in 8 months in February as slump in the services sector moderated and manufacturing grew at a stronger pace, an HSBC survey said.
Rating agency Icra on Wednesday said while there is some evidence of the economic recovery becoming broad-based in the third quarter of fiscal 2022, it is yet to attain the durability being sought by the Monetary Policy Committee (MPC) as a precursor to policy transmission. The agency expects the real GDP to expand 6-6.5 per cent year-on-year in the third quarter of FY2022 (+8.4 per cent in Q2 FY2022). It also sees the RBI maintaining the status quo in the upcoming monetary policy review to be held in February.
The Reserve Bank on Friday retained the GDP forecast for the current financial year at 9.5 per cent and flagged global semiconductor shortages, elevated commodity prices and potential global financial market volatility as downside risks to economic growth. In his address after the three-day meeting of the rate-setting panel, RBI Governor Shaktikanta Das said recovery in aggregate demand gathered pace in August-September, and it is reflected in high-frequency indicators, like railway freight traffic; port cargo; cement production; electricity demand; e-way bills; GST and toll collections. "The ebbing of infections, together with improving consumer confidence, has been supporting private consumption," he said, and added the pent-up demand and the festival season should give further fillip to urban demand in the second half of the financial year.
After fighting inflation for more than two years, Reserve Bank of India (RBI) Governor Duvvuri Subbarao finally managed to bring it below the five per cent level - the tolerance level of the central bank - in FY14.
Six out of eight monetary policies announced by him during his entire tenure so far have been on Tuesdays
The reverse repo ceiling was imposed in March when liquidity in the banking system was tight and the overnight call rate had touched a peak of 80 per cent.
Retail inflation dipped marginally to 6.44 per cent in February, mainly on account of a slight easing in prices of food and fuel items though it remained above the Reserve Bank's comfort level of 6 per cent for the second month in a row. As per the government data released on Monday, the Consumer Price Index (CPI)-based inflation was at 6.52 per cent in January and 6.07 per cent in February 2022. The retail inflation rate for the food basket worked out to be 5.95 per cent in February, marginally lower than 6 per cent in January.
The RBI has changed the way it approached supervision in the past. Having seen a couple of collapses in the NBFC sector and the near-collapse of a few banks, it is focusing on regular drills to prevent a fire from breaking out, explains Tamal Bandyopadhyay.
As COVID-19 infections spike in the country resulting in restrictions in various states and impacting the fragile recovery, many economists are expecting RBI to delay the policy normalisation move, which is expected in the February review. The country has reported a single-day rise of 58,097 new Covid-19 cases as of Wednesday morning--the highest in around 199 days -- of which 2,135 are Omicron cases and later in the day, the first confirmed Omicron-related death has also been reported. Maharashtra recorded the maximum number of 653 Omicron cases followed by Delhi at 464, Kerala 185, Rajasthan 174, Gujarat 154 and Tamil Nadu 121 cases, taking the total tally of cases to 3,50,18,358.
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Industry's demand for a reduction in the repo rate, currently 8 per cent, has gained momentum after wholesale and retail inflation eased in February.
The Reserve Bank of India on Friday decided to leave benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance as the economy faces heat of the second Covid wave.
GDP growth of 7.7 per cent in the first half of this fiscal has "left sceptics gasping and woefully behind the curve", an RBI article said on Wednesday. It also stressed the buildup in the growth momentum is likely to be sustained. The article on the state of the economy published in the Reserve Bank's December Bulletin on Wednesday also said CPI-based retail inflation is expected to ease to 4.6 per cent in the first three quarters of 2024-25 from 5.6 per cent in November.
In the Union Budget for Financial Year 2023-24 (FY24), Finance Minister Nirmala Sitharaman had held forth on the need for better governance and investor protection in the banking sector. She had proposed certain amendments to the Reserve Bank of India Act (RBI Act), 1934; the Banking Regulation Act (BR Act), 1949; and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
The SBI report, however, said the economic growth rate will pick up pace in 2020-21 to 6.2 per cent.
Analysts expect RBI to restore 100-bp corridor in Tuesday's policy review.
Pressure has been mounting on the Reserve Bank of India to cut interest rates in the wake of declining retail inflation and the need to fuel growth momentum. However, the RBI will have to do a tightrope walk as globally interest rates are inching upwards.
The Reserve Bank on Friday projected retail inflation to be in 5-5.2 per cent range during the first half of the next fiscal year, expecting further softening of vegetables prices in near term. Also, it has lowered the retail inflation forecast for the current January-March quarter of 2020-21 fiscal at 5.2 per cent. The Reserve Bank (RBI) has kept the key policy rate unchanged at 4 per cent, with an accommodative stance, so as to ensure that inflation remains well within the target, Governor Shaktikanta Das said while announcing the last monetary policy of 2020-21.
Some accounts can be revived by rescheduling loans, which the RBI envisages to do once the norms get finalised after the public discussion.
The Covid winter seems to be finally ending for debt-oriented mutual fund (MF) schemes as interest rates peak, especially for those that invest in shorter-maturity papers. In the past two months, shorter-horizon debt schemes - ultra-short, low-duration, and money-market - have together raked in net inflows of Rs 48,000 crore, the highest for two months since April-May 2021. These schemes invest in shorter-maturity papers ranging from three months to a year.
The S&P BSE Sensex shed 119 points to close at 27,977 and the Nifty50 dropped 45 points to finish at 8,591.
Reserve Bank Governor Shaktikanta Das on Friday said 67 per cent of the decline in the foreign exchange reserves since April was due to valuation changes arising from strengthening US dollar and higher American bond yields. The forex reserves, which stood at $606.475 billion as on April 2, have declined to $537.5 billion as on September 23. It was also the eighth straight week when the reserves declined.
After turning net buyers last month, foreign investors have become aggressive shoppers of Indian equities and have invested Rs 22,452 crore in the first two weeks of August amid softening inflation concerns. This was way higher than a net investment of nearly Rs 5,000 crore by Foreign Portfolio Investors (FPIs) in the entire month of July, data with depositories showed. FPIs had turned net buyers for the first time in July, after nine straight months of massive net outflows, which started in October last year.
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Markets ended tad lower with financials declining the most ahead of RBI policy review tomorrow.
The recovery in the Indian services sector was sustained in November as new work orders supported business activity growth and the first rise in employment in nine months, a monthly survey said on Thursday.
The six-member monetary policy committee voted 5:1 for the decision, with only Ravindra Dholakia voting for a 0.25 per cent reduction in rates.
The Reserve Bank of India is widely expected to reduce the repo rate for the first time in nine months when it announces its third quarter policy review.
Commercial papers, certificates of deposit also dry up
RBI has pegged the GVA growth of 7.6 per cent for the current fiscal and 7.9 per cent the year after
Many analysts argue with limited space for a fiscal stimulus, the burden of lifting growth lies squarely on monetary policy.
The Reserve Bank is unlikely to lower the interest rates.
The central bank will appear vacuous if it holds fire next week following its ultra hawkish guidance at the last monetary policy review.
Elaborating on its not-so-pleasing outlook on the economy, Crisil said private consumption demand, which has been the bulwark of growth for the last few decades, grew by a pale 3.1 per cent in the first quarter as against 7.2 per cent growth in the preceding quarter.
Following the meeting, Subbarao said the central bank will look into the latest inflation numbers before coming out with the monetary policy review.
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