The Reserve Bank will go for a "dovish pause" at Wednesday's policy review announcement amid developments such as a rise in inflation, government maintaining the inflation target band and a likely impact on growth due to local lockdowns on rising COVID-19 infections, analysts said on Monday. Economists at American brokerage Bofa Securities said price stability, growth and financial stability will become the prime focus areas for the central bank going forward. "The RBI MPC (Monetary Policy Committee) should deliver another dovish pause on Wednesday," it said. The policy announcement, the first for the fiscal, will come days after the government maintained the RBI's target to ensure inflation to be within 2-6 per cent band for five more years.
Amid fears of a third wave of coronavirus pandemic and hardening of retail inflation, the Reserve Bank is likely to maintain status quo on interest rate and watch the developing macroeconomic situation for some more time before taking any decisive action on monetary policy. The RBI is scheduled to announce its bi-monthly monetary policy review on August 6 at the end of the three-day meeting -- August 4-6 -- of the Monetary Policy Committee (MPC). The RBI Governor-headed six-member MPC decides on the key policy rates.
The Reserve Bank of India on Friday decided to keep the policy rate unchanged for fourth time in a row as it maintains a tight vigil on inflation. The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022. Announcing the bi-monthly monetary policy on Friday, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 6.5 per cent.
The Reserve Bank's rate-setting panel, Monetary Policy Committee (MPC), began its three-day deliberations on Wednesday amid expectations of a status quo on benchmark rate mainly on account of uncertainty over the impact of the second wave of COVID-19 pandemic. Moreover, the fears of firming inflation may also refrain the MPC from tinkering with the interest rate in its bi-monthly monetary policy outcome to be announced on Friday. The RBI had kept key interest rates unchanged at the last MPC meeting held in April.
Jio Finance, a wholly owned subsidiary of Jio Financial Services, is likely to delay its maiden bond issue of Rs 3,000 crore, originally scheduled for this month. The decision comes amid expectations of softening yields in April because the Reserve Bank of India's (RBI's) monetary policy committee (MPC) is widely expected to cut the policy repo rate by another 25 basis points, sources said.
The Reserve Bank of India on Friday decided to keep the policy rate unchanged at 6.5 per cent for the fifth time in a row as it maintains a tight vigil on inflation. The rate increase cycle was paused in April after six consecutive rate hikes, aggregating to 250 basis points since May 2022. Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 6.5 per cent.
Retail inflation eased to a nearly six-year low of 3.16 per cent in April mainly due to subdued prices of vegetables, fruits, pulses, and other protein-rich items, creating enough room for the Reserve Bank to go for another round of rate cut in the June monetary policy review. The Consumer Price Index (CPI) based inflation was 3.34 per cent in March and 4.83 per cent in April 2024. It was 3.15 per cent in July 2019.
The Reserve Bank's rate-setting panel will start its 3-day deliberations on Wednesday amid expectations of yet another rate hike of 50 basis points to check high inflation, in line with similar actions taken by other major central banks, including the US Fed. Based on the recommendations of the Monetary Policy Committee (MPC), the RBI had effected 50 basis points increase in repo rate each in June and August after raising the short-term lending rate by 40 basis points in an off-cycle decision in May. The MPC, headed by RBI Governor Shaktikanta Das, is scheduled to meet during September 28-30.
The Reserve Bank is likely to maintain status-quo on the key interest rates for the third time in a row in its upcoming bi-monthly policy review despite the US Federal Reserve and the European Central Bank hiking benchmark rates, as domestic inflation is within the RBI's comfort zone, say experts. The borrowing cost which started rising in May last year has stabilised with RBI keeping the repo rate unchanged at 6.5 per cent since February when it was raised from 6.25 per cent. In the previous two bi-monthly policy reviews in April and June the benchmark rate was retained.
Maruti, IndusInd Bank, Bajaj Finserv, Eternal, Mahindra & Mahindra, Tata Steel, Kotak Mahindra Bank, Titan, HDFC Bank, and NTPC were among the other major gainers. Bharti Airtel and Sun Pharma were the laggards.
The Reserve Bank on Friday retained inflation projection at 4.5 per cent for the current financial year, lower than 5.4 per cent in the last fiscal. Assuming a normal monsoon this year, CPI (consumer price index-based) inflation for the current year is projected at 4.5 per cent, with Q1 at 4.9 per cent, Q2 at 3.8 per cent, Q3 at 4.6 per cent, and Q4 at 4.5 per cent.
The Reserve Bank of India's (RBI's) state of the economy report observed that any durable alignment of headline retail inflation with the target of 4 per cent could recommence in the second half of FY25 and sustain until numbers closer to the target are seen during the course of FY26, dashing hopes of any reduction in the policy repo rate in the current financial year. The report, authored by RBI staffers, including Deputy Governor in charge of monetary policy Michael Patra, said though headline numbers may fall in July and August due to base effect, it is likely to reverse in September.
'We will be very, very proactive in providing whatever liquidity requirements are needed.'
To ease the potential liquidity stress, the Reserve Bank on Friday slashed Cash Reserve Ratio (CRR) by 50 basis points to 4 per cent, a move that would unlock Rs 1.16 lakh crore bank funds. The RBI on May 4, 2022 had raised CRR to 4.5 per cent from 4 per cent in an off-cycle Monetary Policy Committee (MPC) meeting, with effect from May 21 the same year.
The RBI is fully aware that the high-cost loans and high indebtedness of the borrowers could pose financial stability risks, if not addressed by these NBFCs. Governor Shaktikanta Das has issued a stern warning, saying the RBI is closely monitoring these areas and will not hesitate to take appropriate action, if necessary, if the culprits don't opt for self-correction. Watch out for some action, soon, notes Tamal Bandyopadhyay.
'A possible post-election growth momentum may be lost.'
The Reserve Bank on Wednesday retained the retail inflation projection at 4.5 per cent for fiscal 2024-25, with Governor Shaktikanta Das stressing that the central bank will have to closely monitor the price situation and keep the "inflation horse" under tight leash lest it may bolt again. Unveiling the October bi-monthly monetary policy, the Governor also said the flexible inflation targeting (FIT) framework has completed 8 years since its introduction in 2016 and is a major structural reform of the 21st century in India.
Days after the US Fed raised the interest rate, the RBI may go in for its third consecutive policy rate hike by at least 35 basis points to check high retail inflation, experts said. The central bank has already announced to gradually withdraw its accommodative monetary policy stance. The Reserve Bank of India's rate-setting panel -- the Monetary Policy Committee -- will meet for three days from August 3 to deliberate on the prevailing economic situation and announce its bi-monthly review on Friday.
The highlights of RBI's bi-monthly monetary policy announced by Governor Shaktikanta Das:
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.
Analysts at Bank of America Merill Lynch said that fears of inflation getting "generalised" are overdone, as only two sub-categories of fuel and light and housing (accounting for 22 per cent of the basket) have seen a price-rise above the headline 5.2 per cent.
Kotak Mahindra Bank was the biggest loser in the Sensex pack, sliding 2.68 per cent, followed by Tech Mahindra, Mahindra & Mahindra, Axis Bank, Hindustan Unilever, Tata Motors, Tata Consultancy Services, Bajaj Finserv, Bajaj Finance, Nestle and Titan. In contrast, NTPC, Power Grid, Larsen & Toubro, HDFC, Reliance and HDFC Bank were the gainers.
Retail inflation breached the Reserve Bank's upper tolerance level, soaring to a 14-month high of 6.21 per cent in October mainly on account of rising food prices. Inflation based on the consumer price index (CPI) was 5.49 per cent in September and 4.87 per cent in the year-ago month. Retail inflation trended below the RBI's upper tolerance band of 6 per cent since September last year.
Reserve Bank of India (RBI) Governor Shaktikanta Das said on Friday said the central bank has developed an innovative artificial intelligence and machine learning (AI/ML) based model MuleHunter.ai to address the growing issue of mule bank accounts that are often used for committing financial fraud. Developed by the Reserve Bank Innovation Hub, the new initiative is piloted with two public sector banks.
While the economy seems to be on a firm growth path, the fight against inflation is not over yet. Shaktikanta Das seems to be in no hurry. After playing well through a five-year Test match, he doesn't want to get out hit wicket, observes Tamal Bandyopadhyay.
From the Sensex pack, Larsen & Toubro, JSW Steel, IndusInd Bank, Power Grid, ITC, Mahindra & Mahindra, NTPC, HDFC Bank, ITC, Reliance Industries and Tata Motors were among the major laggards. Bajaj Finserv, Asian Paints Bajaj Finance, Bharti Airtel and Axis Bank were among the gainers.
The Reserve Bank of India (RBI) on Friday hiked repo rate by 50 basis points to 5.90 per cent in order to control the rising inflation, keeping in line with the aggressive policies of central banks and the volatile markets prevalent across economies. RBI Governor Shaktikanta Das announced the rate hike today. In the meeting of the Monetary Policy Committee (MPC) that started on Wednesday, five of the members of the MPC voted to hike the key lending rate, repo rate, by 50-basis points (bps).
The RBI's Monetary Policy Committee brainstormed the impact of any future shocks on the inflation trajectory and stressed monitoring the cumulative effect of monetary policy actions over the past one year, which is still unfolding, revealed minutes of the rate-setting panel released on Thursday. The minutes of the meeting of the Monetary Policy Committee (MPC), headed by Reserve Bank Governor Shaktikanta Das, also indicated it would be premature to declare an end to the monetary tightening cycle, which started in May 2022 to check high inflation following the outbreak of the Russia-Ukraine war. The central bank, which effected six back-to-back hikes in the key short-term lending rate (repo) since May 2022 to check high inflation, decided to take a pause early this month.
The Reserve Bank of India on Thursday decided to keep policy rate unchanged for third time in a row as it maintains heightened vigil on inflation. The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022.
Amid a debate on the basis of a monetary policy stance, one may be curious enough to know how non-food retail inflation has behaved over the years in India. Let the eager souls catch a glimpse of facts. In the past 10 years, non-food inflation came down below 4 per cent on two occasions - pre-Covid period of 2019-20 and now in the first four months of the current financial year (FY25).
After raising interest rate by a cumulative 250 basis points in 11 months, the Reserve Bank of India (RBI) on Thursday unexpectedly kept benchmark rate unchanged as global banking woes added uncertainty to the economic outlook. Five out of six members of MPC voted to remain focused on the withdrawal of accommodation to ensure inflation aligns with target while focusing on growth, RBI Governor Shaktikanta Das said on Thursday. The Monetary Policy Committee of the central bank decided to take a pause after a rate hike seen in previous six consecutive policies.
Reserve Bank will have to constantly re-assess the "dynamic and fast changing situation" and tailor its actions accordingly, Governor Shaktikanta Das said during the recent meeting of the Monetary Policy Committee (MPC) which decided to maintain status quo on key interest rate. According to the minutes of the six-member MPC meet released by Reserve Bank of India (RBI) on Friday, the five other members had also expressed a similar opinion amid the ongoing Russia-Ukraine conflict's impact on the global and domestic economies. MPC, which held its meeting from April 6-8, unanimously decided to keep the borrowing costs unchanged at a record low for the 11th time in a row in a bid to continue supporting economic growth despite inflation edging higher in the aftermath of Russia-Ukraine conflict.
The Reserve Bank of India (RBI) conducted two overnight variable rate reverse repo (VRRR) auctions on Tuesday, marking the first instance of such action in a single day. The move aimed to reduce liquidity from the banking system, which has been largely in deficit mode for the past four months. Market participants noted that the central bank held the second VRRR auction due to its awareness of funds being released to banks during the day.
The Reserve Bank's rate setting panel on Thursday met to finalise a report for the government on why it failed to keep retail inflation below the target of 6 per cent for three consecutive quarters since January this year, said sources. The report will be presented to the government as per the Reserve Bank of India Act, they added. The six-member Monetary Policy Committee (MPC) is headed by Governor Shaktikanta Das.
From the Sensex pack, Power Grid, Mahindra & Mahindra, JSW Steel, HCL Technologies, Sun Pharma, Nestle, IndusInd Bank, Reliance Industries, Bharti Airtel and ITC were the major laggards. Tech Mahindra, Wipro, Bajaj Finance, State Bank of India, Bajaj Finserv, Axis Bank, Titan and ICICI Bank were among the major gainers.
Wednesday's was the first MPC meeting that had a dissent note.
RBI's interest rate decision, quarterly earnings and global cues would be the major driving factors for equity markets this week, analysts said adding that the impact of the Union Budget could linger on this week. Trading activity of foreign investors will also be a key driver for the markets, experts noted. "US and India's manufacturing PMI for January to be released on Monday, will be the key macro data to watch out for.
The Reserve Bank on Wednesday increased the benchmark lending rate by 40 basis points (bps) to 4.40 per cent in a bid to contain inflation, which has remained stubbornly above the target zone of 6 per cent for the last three months. The decision follows an unscheduled meeting of the Monetary Policy Committee (MPC), with all six members unanimously voting for a rate hike while maintaining the accommodative stance. While the inflation has remained above the targetted 6 per cent since January, RBI Governor Shaktikanta Das said the inflation print in April is also likely to be high.
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.
Wholesale inflation fell to a 3-month low of 2.04 per cent in July on decline in prices of food items especially vegetables, government data released on Wednesday showed. The decline in wholesale price index (WPI) based inflation in July came after it rose for four months in a row till June, when it was 3.36 per cent. It was (-) 1.23 per cent in July last year. In April wholesale inflation stood at 1.19 per cent.
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