RBI said the outlook for economic growth for 2016-17 has turned uncertain after the unexpected loss of momentum by 50 basis points in Q2 and the effects of the withdrawal of banned notes
At interactions last week with senior officials from the Reserve Bank of India, select banks gave feedback on two key bond market concerns, namely, recent volatility in the rupee-dollar exchange rate and heavy losses incurred on floating rate government bonds due to a demand-supply mismatch, sources told Business Standard. The discussions were held ahead of the RBI's next monetary policy statement, scheduled on August 5. Indian banks are large holders of government securities because of a regulatory mandate to set aside a certain percentage of deposits in sovereign bonds.
"The Monetary Policy Committee recognises that there is monetary policy space for future action. However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture," the RBI said in its fifth bi-monthly monetary policy for this fiscal.
Firm Asian cues and a higher opening of European markets reflecting a rally on Wall Street, where all three US indices hit new records following strong economic data, bolstered trading sentiments here
Governor Urjit Patel and his deputies spoke to the media about the central bank's decision to raise the repo rate.
Fitch said the full implications of Patel's resignation will only become clearer once there is some indication of the RBI's policy approach under his replacement, Shaktikanta Das
The central bank has clearly signalled the conditions under which monetary easing would take place early this quarter. And, current conditions meets the RBI's paramters
'To the believers of crypto regulations, I have only one question to ask, how will you regulate it?'
Most economists feel the RBI has room for a 25-basis point cut, having met inflation targets comfortably
He has had a productive first year at the RBI -- one which saw, also, India's economic imbalances improve and the unexpectedly strong general election outcome.
Jaitley said inflation has been under control for long and is likely to remain so on the back of good monsoon and unlikely spike in oil prices.
Stressing that economic growth will only move upwards, the Reserve Bank of India Governor Shaktikanta Das on Friday pegged the GDP growth rate for the next financial year at 10.5 per cent, though a tad lower than the government's projection of 11 per cent. The projection is in line with the estimates in the Union Budget 2021-22 presented in Parliament earlier this week. The Economic Survey, tabled by the government in Parliament recently, has projected that the economy will grow at 11 per cent, up from an estimated historic decline of 7.7 per cent in 2020-21, on account of the COVID-19 pandemic.
The fourth consecutive rate cut is expected to lower equated monthly instalments (EMIs) for home and auto buyers, and borrowing cost for corporate.
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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.
Reserve Bank, in its mid term review of the monetary policy on Friday, decided to hike short term policy rate by 0.25 per cent after a gap of two years and ease liquidity by reducing the marginal standing facility rate for banks.
Referring to the proposed new monetary policy framework, it said in the weeks ahead, government and RBI will work towards it.
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.
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.
If imputed inflation for April and May is used, then you have inflation of over 6 per cent for two consecutive quarters, which is a worrying signal for the RBI.
There hasn't been any dramatic moment in the first act (the Budget) but nobody would complain. It's par for the course as long as the figures don't change in the main Budget, which will be presented after general elections.
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CII hopes that the RBI would not wait for the next quarterly review but intervene sooner if the economic condition warrants a mid-course correction.
He argued that if inflation is low, stable and moving towards the 4 per cent target, why has the RBI not revised downward the bank rate fixed in June 2023?
Reserve Bank of India Governor Urjit Patel on Saturday exhorted banks to reduce their lending rates to push credit demand in laggard segments, saying banks have benefited from influx of low-cost deposits and its previous repo rate cuts.
The employment situation remains dire. Whatever can be done to promote greater low-skill employment should be pursued aggressively, advises former chief economic adviser Shankar Acharya.
RBI retained the GDP growth for the financial year 2018-19 at 7.4 per cent.
The banking sector in India is reeling under Rs 8 lakh crore of non performing assets (NPAs) or bad loans, of which PSU banks alone account for over Rs 6 lakh crore.
The main reason was that CPI inflation would likely remain below 4 per cent till July.
Raghuram Rajan said the passage of the GST Bill augurs well for the growing political consensus for economic reforms.
There is little scope for significant monetary easing even in the next fiscal year.
In April, RBI had projected retail inflation to be around 5 per cent.
The RBI projection of 6.9 per cent GVA growth for the current fiscal comes on the back of the Economic Survey last week forecasting economic growth of 6.5 per cent.
The US Federal Reserve's interest rate decision, global market trends and trading activity of foreign investors are the major factors that would dictate terms in the equity markets in a holiday-shortened week ahead, analysts said. Equity markets will remain closed on Tuesday on account of Ganesh Chaturthi. From the global front, interest rate decisions from the Bank of England and Bank of Japan would also influence market trends.
Terming the RBI action on Wednesday as a "pleasant surprise", analysts today cautioned that possibility of a rate hike in the future cannot be ruled out. Urijit Patel committee's report on monetary policy would clear the air on RBI's future stand, they added.
The Reserve Bank of India on Wednesday retained the economic growth projection for the current financial year at 10.5 per cent, while cautioning that the recent surge in COVID-19 infections has created uncertainty over the economic growth recovery. In its last policy review, the RBI had projected a GDP growth rate of 10.5 pc for FY'22. Taking various factors into consideration, it said, "the projection of real GDP growth for 2021-22 is retained at 10.5 per cent consisting of 26.2 per cent in Q1, 8.3 per cent in Q2, 5.4 per cent in Q3 and 6.2 per cent in Q4."
The first task before him is to get used to the idea of working with the Monetary Policy Committee
Retail inflation fell to a five-month low of 4.35 per cent in September from 7.27 per cent in the year-ago period as prices of vegetables and other items declined, according to government data released on Tuesday. The moderation in Consumer Price Index-based inflation is in line with the assessment of Reserve Bank Governor Shaktikanta Das who recently projected substantial softening of retail inflation. The CPI inflation was at 5.3 per cent in August and at 7.27 per cent in September 2020.
Wholesale price-based inflation rose to an eight-month high of 0.26 per cent in November, driven by a sharp jump in food prices, especially onion and vegetables. The WPI inflation was in the negative or deflationary zone for the past seven months since April and was at (-)0.52 per cent in October. The last positive WPI inflation was recorded in March at 1.41 per cent.
The rate of price rise in vegetables stood at 15.15 per cent in August as against 16.88 per cent in the previous month.
For July-September, it pegged CPI-based retail inflation at 4.2 per cent which it saw firming up to 4.8 per cent in the second half of the current fiscal.
The methodology will be announced later this week.
