Subbarao's annual statement will be of unusual interest this year
These are the highlights of the seventh bi-monthly monetary policy statement for 2019-20 by the RBI amid COVID-19 pandemic:
Food inflation has touched a 10-year-high of 19.95 per cent and the inflation rate based on the Wholesale Price Index, which was estimated at 4.78 per cent, is expected to cross 6 per cent by the end of the month.
The United Nations has revised downward India's economic growth forecast for 2026 to 6.4 per cent from an earlier 6.6 per cent, attributing the change to global uncertainties and economic shocks stemming from the ongoing West Asia crisis.
The central bank kept cash reserve ratio unchanged at 4 per cent.
Highlights of RBI's third quarter review of monetary policy.
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
Inflows from Europe, falling crude oil to come to the rescue if rupee cracks against the dollar.
'If the war continue for a longer period of time, it is just a matter of time before the government will pass on some of the price increases.'
The chances of ending the current fiscal year at anywhere near the 5.5 per cent that RBI officially targets seem bleak indeed.
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.
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.
Reducing policy rates is not enough. The key is to ensure banks lend to credit-constrained borrowers.
The Lok Sabha elections in 2024 are not a consideration when it comes to monetary policymaking, said Reserve Bank of India governor Shaktikanta Das to underscore the central bank's commitment to controlling inflation. "It's not possible for me to comment what we do in the next MPC (Monetary Policy Committee), but one thing I can tell and I would like to make it very clear-that the fact of elections coming up in 2024 is not a factor at all so far as monetary policymaking is concerned. "Monetary policymaking is for checking (and) controlling inflation," Das said at the Business Standard, BFSI Insight Summit.
Crude oil prices surged over 3% in futures trade after US President Donald Trump expressed doubts about the Iran ceasefire, reigniting fears of supply disruptions from West Asia and pushing Brent crude above USD 107 per barrel.
Next bi-monthly policy statement on September 30.
While the RBI, in the recent past, appeared keen to move to an inflation-targeting framework, industry and academia remain divided on this issue.
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.
Short-term lending rate unchanged at 7.75 pc.
India's banking system is grappling with a persistent liquidity surplus exceeding Rs 5 trillion, driven by significant government spending and bond redemptions, leading market participants to anticipate the Reserve Bank of India will step up Variable Rate Reserve Repo operations to manage the excess funds.
The central bank raised statutory liquidity ratio, the portion of deposits that banks are required to keep in government securities, by 100 basis points to 25 per cent. Other key rates were unchanged.
The apex bank hiked its repo, reverse repo (overnight lending and borrowing rates) to 5.25 per cent and 3.75 per cent, respectively, while the cash reserve ratio, or the portion of deposits banks park with RBI, to 6 per cent in line with analysts' expectations.
The highlights of the RBI's fourth monetary policy review of fiscal year 2022-23 announced by Governor Shaktikanta Das.
Amid expectations that the Reserve Bank may keep its monetary stance unchanged, the central bank will come out with its second quarter review of the credit policy for the current fiscal on October 27.
The Reserve Bank has reduced interest rate by 150 bps since January 2015.
Inflation to peak in the current quarter within tolerance band, moderating in the second half of next fiscal, says central bank.
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.
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.
India's retail inflation, measured by the Consumer Price Index (CPI), increased to 3.48 per cent in April, up from 3.40 per cent in March, primarily due to a surge in prices of gold and silver jewellery, as well as certain kitchen staples like tomatoes and cauliflower.
Patra, as executive director of the central bank, was the principal advisor to the Monetary Policy Department since July 2012.
Insights from behavioural economics suggest that an ambitious nudge can be effective if three conditions are met, points out Ram Singh Insights from behavioural economics suggest that an ambitious nudge can be effective if three conditions are met, points out Ram Singh, director, Delhi School of Economics.
Let's wait for the monetary policy on February 8 -- to see how it complements the fiscal commitments, points out Tamal Bandyopadhyay.
"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.
Baby steps are pleasing to see, but when it comes to policy-making, one has to see where they go. Policy statements rarely provide the specific rationale for the proposed "baby steps". Economists, who see "baby steps" as "interest rate smoothening", infer a rationale for such actions in a variety of ways, as for example from the minutes of the policy meetings where they are made available.
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.
Indian markets on Dalal Street rallied sharply as easing tensions in the US-Iran conflict and stable oil prices boosted sentiment. Track Nifty 50 and BSE Sensex performance and key global triggers.
From liquidity, monetary policy operations to financial inclusion, know about RBI monetary policy
Even if there is an early agreement on a cessation of hostilities in West Asia, the price shock will not go away easily, points out A K Bhattacharya.
The RBI cut the rate several times last year to reduce it by 125 basis points to the current 6.75 percent.
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