The Indian rupee rebounded 50 paise from its all-time closing low to settle at 96.36 against the US dollar, driven by retreating crude oil prices, signs of easing geopolitical friction, and likely central bank intervention.
State Bank of India Chairman C S Setty has expressed support for a 'pause' in policy rates by the Reserve Bank of India's monetary policy committee, believing it will help stabilise conditions and support economic growth. He also urged investors to look beyond short-term equity market movements and focus on India's structural transformation, driven by reforms and digital infrastructure.
Reserve Bank of India (RBI) Governor Sanjay Malhotra stated that recent regulatory measures to address foreign exchange market volatility, such as capping banks' net open positions, are temporary and aligned with current market conditions, not signalling any structural shift in policy.
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
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.
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.
RBI's previous monetary policy was announced on September 29.
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
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.
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 RBI has hiked repo or short-term lending rate up by 0.25 pc to 7.75 pc.
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 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.
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%.
India's wholesale price inflation (WPI) increased to 9.87 per cent in June, up from 9.68 per cent in May, primarily due to significant price increases in non-food and food products, with food inflation alone rising to 5.49 per cent.
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.
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.
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.
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.
'...A new challenge has emerged in the form of Mythos.'
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 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.
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.
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.
'Banking is the only sector that can see double-digit growth in FY27.'
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.
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The truth is the government and the Reserve Bank enjoy a free, frank and cordial relationship.
"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.
The time frame for this is difficult to specify and much depends on stability in the foreign exchange markets, Prime Minister's key economic advisor C Rangarajan said.
The Reserve Bank of India's proposal to allow non-banking financial companies (NBFCs) access to the term money market is projected to significantly increase market volumes by 40-60 per cent in the first year, potentially doubling turnover within two to three years, according to treasury executives.
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.
The policy will be presented in the backdrop of rising inflation.
'Rate cut looks unlikely and there is reason to believe that the cycle is over.'
