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The <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> announced the decision of the newly formed six-member MPC (<keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword>) today, following the conclusion of the three-day meeting, which began on October 7, 2024. Treading along expected lines, RBI rate-setting panel left the repo rate unchanged at 6.5% for the 10th consecutive time, in its 51st meeting today. The decision was made by a majority, with 5 out of 6 members voting for leaving the rate unchanged. This is the fourth bi-monthly monetary policy review for FY25, and the first since three external members were appointed to the panel earlier this month. The tenure of the previous three members had come to an end on October 4, 2024. While the outgoing members include Ashima Goyal (emeritus professor, Indira Gandhi Institute of Development Research), Shashanka Bhide (honorary senior advisor, National Council of Applied Economic Research); and Jayanth R. Varma(professor, Indian Institute of Management, Ahmedabad), the income members are Ram Singh (Director, Delhi School of Economics), Saugata Bhattacharya, an economist; and Nagesh Kumar (Director and chief executive, Institute for Studies in Industrial Development). <h2>Wait and Watch </h2>RBI also changed its policy stance to neutral, while remaining committed to growth and bringing down inflation to its target of 4%. This means that at present, the bank is not inclined to either increase or decrease the interest rates, but will take a call depending on macroeconomic conditions and prevailing factors. "Taking all these factors into consideration, the real GDP growth for 2024-25 is projected at 7.2%, with Q2 at 7%, Q3 at 7.4% and Q4 at 7.4%", he said. As for inflation, Das highlighted that headline inflation had softened significantly in July and August and even food inflation experienced a certain degree of correction during these two months. Keeping this in mind, CPI inflation for 2024-25 i.e. current year is projected at 4.5%, with Q2 at 4.1%, Q3 at 4.8% and Q4 at 4.2%. CPI for first quarter of next financial year i.e. 2025-26 is estimated at 4.3%. "It's with a lot of effort that inflation horse has been brought to the stable, i.e. closer to the target and within the tolerance span, compared to its place or heightened levels two years ago. We have to be very careful about opening the gate, as the horse may simply hold again. We must keep the horse in tight leash, so that we do not lose control", Das added. Most economists had anticipated a change in the central bank's current policy stance of 'withdrawal of accommodation'. This policy stand indicates that any interest rate cuts are presently off the table. However, given the ongoing geopolitical crisis and Fed's jumbo rate cut by 50-basis points last month, RBI may bring about a cut in interest rates, sooner than later. However, since food inflation remains high at 5.42% as of July 2024, experts had also estimated that now might not have been a good time for RBI to bring down interest rates. Moreover, PMI (purchase managers index) indices, which help in gauging the health of manufacturing and service sectors in the country, presently stand at a multi-month low, and even the core sector output is witnessing a contraction after 42 straight months. As Suman Chowdhury, Executive Director &amp; Chief Economist, Acuité Ratings &amp; Research had highlighted, the current circumstances are not really conducive for RBI to opt for any affirmation action towards an easier monetary policy. "While the fear of the inflation “elephant” may have subsided with the CPI headline print well within 4.0% over the last two months and a favorable monsoon, the concerns around the stability of food inflation still linger among policy makers. The RBI may wait till December 2024 or February 2025 to make a rat cut, he continued. <h2>Housing sector rejoices</h2>From the point of view of homebuyers, the relatively affordable home loan interest rate regime will continue at a critical time for the Indian housing market - the festive season - amid rising housing prices and tapered sales. Q3 2024 saw average housing prices rise by a cumulative 23% in the top 7 cities even as average prices in these markets collectively rose to approximately Rs 8,390 per sq. ft. by Q3 2024-end, from Rs 6,800 per sq. ft. in Q3 2023. "The unchanged home loan rates are much-needed demand support in the ongoing festive quarter. We are expecting faster sales momentum in Q4 2024 when compared to the preceding quarter. This year's festive quarter may see similar demand to that seen in this period a year ago, if not higher. Over 1.27 lakh units were sold across the top 7 cities back in Q4 2023. Unchanged interest rates will play and important role in achieving and maintaining this momentum", says Anuj Puri, Chairman - ANAROCK Group

RBIs MPC meet concludes today: Repo rate left unchanged at 6.5%

Mumbai: The Reserve Bank is unlikely to cut the benchmark <keyword id="20071327" type="General" weightage="20" keywordseo="interest-rate" source="keywords">interest rate</keyword> in its forthcoming bi-monthly monetary policy review later in the week as <keyword id="19999652" type="General" weightage="20" keywordseo="retail-inflation" source="keywords">retail inflation</keyword> is still a cause of concern, and there is a possibility of the Middle East crisis deteriorating further, impacting crude oil and commodity prices, say experts. Earlier this month, the government reconstituted the Reserve Bank's rate-setting panel -- <keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (MPC). The reconstituted panel, with three newly appointed external members, will commence its maiden meeting on Monday. MPC Chairman RBI Governor Shaktikanta Das will reveal the outcome of the three-day discussion on Wednesday (October 9). The <keyword id="19899810" type="General" weightage="100" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI) has kept the repo or short-term lending rate unchanged at 6.5 per cent since February 2023, and experts think some easing could only be possible in December. The government has tasked the central bank to ensure that Consumer Price Index (CPI) based retail inflation remains at 4 per cent with a margin of 2 per cent on either side. In the current context, experts feel that the RBI may not follow the US Federal Reserve, which lowered the benchmark rates by 50 basis points, and the central banks of some developed nations, which have reduced the interest rates. "We do not expect any change in the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> or stance by MPC. The reason is that inflation for September and October will be above 5 per cent, and the present low inflation is due to the base effect. Besides, core inflation is inching upwards," said Madan Sabnavis, Chief Economist, Bank of Baroda. Further, the recent Iran-Israel imbroglio can intensify, and there is uncertainty here, he said. "Hence, the status quo is the most likely option even for new members. Inflation forecast may be lowered by 10-20 bps and no change in GDP forecast likely," said Sabnavis. The central bank last hiked the repo rate to 6.5 per cent in February 2023 and since then, it has held the rate at the same level. Icra Chief Economist Aditi Nayar said that given the undershooting in the initial first quarter GDP growth relative to the MPC's forecast and the likely sizeable undershooting in the second quarter CPI inflation print as well, "we believe a stance change to neutral may be appropriate in the October 2024 policy review". This could be followed by a shallow rate-cutting cycle of 25 bps each in December 2024 and February 2025, she added. "The abundant monsoon offers some insurance for crop inflation. The impact of global political developments and geopolitical uncertainty on the growth inflation dynamics remains a risk," Nayar added. An HSBC report said three developments stand out -- softer growth numbers have trickled in recently, inflation has been falling, and the external environment has moved from rate hikes to cuts. "We believe the RBI doesn't gain from waiting any longer. We think it will change its stance from a hawkish 'withdrawal of accommodation' to 'neutral' in the upcoming 9 October policy meeting, followed by repo rate cuts of 25 bps each in the December and February meetings, taking the repo rate to 6 per cent," the report said. The RBI kept the repo rate unchanged at 6.5 per cent in its August bi-monthly review amid risks from higher food inflation. This was the ninth consecutive MPC meeting, which decided to maintain the status quo on the rate front. Pradeep Aggarwal, founder and chairman, Signature Global (India) Limited, said while the real estate industry, developer community, and homebuyers are hoping for an interest rate cut in the upcoming monetary policy review, the RBI is likely to hold on to the interest rate cuts for the tenth consecutive time. "The apex bank still seems uncomfortable with the overall retail inflation scenario, particularly food inflation. As such, it is expected to maintain the status quo. The recent interest rate cut by the US Federal Reserve has ignited similar hopes even in India, but the domestic scenario is very different," he added. SBM Bank India Head Treasury Mandar Pitale believed that the MPC has persistently advocated a restrictive policy until inflation aligns durably towards the 4 per cent target. "With the unfavourable base effect taking the next couple of CPI prints near 5 per cent plus or minus, it will pose a major challenge for MPC to start easing from the October meeting," Pitale said, adding that the MPC is also expected to deliberate upon the global factors like growth-inflation behaviour in developed economies. The government has appointed Ram Singh, Saugata Bhattacharya, and Nagesh Kumar as external members of the MPC. They have replaced Ashima Goyal, Shashanka Bhide, and Jayanth R Varma. Apart from the Governor, the other internal members are the RBI Deputy Governor in charge of monetary policy Michael Debabrata Patra and the Executive Director monetary policy department of RBI Rajiv Ranjan. In an off-cycle meeting in May 2022, the MPC raised the policy rate by 40 basis points and it was followed by rate hikes of varying sizes, in the subsequent meetings till February 2023. The repo rate was raised by 250 basis points cumulatively between May 2022 and February 2023.

Status-quo on interest rate likely, say experts ahead of RBI's policy review

The Indian central bank’s rate-setting panel, the Monetary Policy Committee (MPC), has kept the <keyword id="2177983" type="General" weightage="20" keywordseo="repo-rate-unchanged" source="Orion">repo rate unchanged</keyword> at 6.5%, <keyword id="6359111" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="Orion">Shaktikanta Das</keyword>, governor of the Reserve Bank of India (<keyword id="30067" type="General" weightage="20" keywordseo="RBI" source="Orion">RBI</keyword>), confirmed on Friday. The decision was taken in a majority 4:2 vote by the six-member MPC, headed by <keyword id="7268643" type="General" weightage="20" keywordseo="rbi-governor-shaktikanta-das" source="Orion">RBI Governor Shaktikanta Das</keyword>. This meeting followed closely on the heels of Lok Sabha 2024 election results and a renewed but less robust mandate for the NDA government, spearheaded by Prime Minister Narendra Modi. This marks the eighth consecutive instance where the central bank has maintained the status quo on the benchmark <keyword id="43352" type="General" weightage="100" keywordseo="repo-rate" source="Orion">repo rate</keyword>. It had last increased the repo rate to 6.5 percent back in February 2023. For context, the repo rate is the interest rate at which the RBI lends to banks. When the repo rate is cut, it makes borrowing cheaper for banks, which in turn leads to lower loan rates and consequently, reduced EMIs. "As expected, the MPC has decided to keep the repo rate unchanged at 6.5%. This decision aligns with the MPC's calibrated measures to tackle persistent inflation. The RBI has successfully maintained the resilience of the Indian economy, contributing to sustained growth momentum even amidst a challenging global environment," said Mr Ashwin Chadha, CEO of India Sotheby's International Realty. "The good news is that CPI inflation continues to soften, and the GDP growth rate is projected to remain above 7% for all quarters of FY2024-25. Additionally, the monsoon is expected to be favorable, reducing potential risks to the economy." Governor Das, in his post-policy press conference, also underscored the need for a balanced approach in handling monetary policy. He highlighted the MPC's strategy of gradually scaling back accommodation to ensure that inflation meets the targeted range, while still fostering economic growth. “Monetary policy must continue to remain disinflationary and be resolute in its commitment to aligning inflation to the target of 4 per cent on a durable basis to sustain price stability and outset strong foundation,” the <keyword id="64190" type="General" weightage="20" keywordseo="rbi-governor" source="Orion">RBI Governor</keyword> stated. The RBI has also updated its growth forecasts for the 2024-25 financial year, predicting a GDP growth rate of 7.2%. The projections for each quarter are 7.3% for Q1, 7.2% for Q2, 7.3% for Q3, and 7.2% for Q4. Governor Das pointed out that the risks to this growth outlook are evenly distributed. By maintaining the repo rate at its current level, the RBI signals its cautious stance on balancing the dual objectives of inflation control and economic recovery support. This decision comes at a crucial time, as the global economy contends with uncertainties from geopolitical conflicts and the ongoing impacts of the COVID-19 pandemic. (With inputs from ANI)

Monetary Policy Committee keeps repo rate unchanged at 6.5%, confirms RBI governor Shaktikanta Das

The <keyword id="19949639" type="General" weightage="20" keywordseo="rupee" source="keywords">rupee</keyword> consolidated in a narrow range and settled for the day lower by 1 paisa at 83.96 (provisional) against US <keyword id="19904292" type="General" weightage="20" keywordseo="dollar" source="keywords">dollar</keyword> on Thursday, after the Reserve Bank expectedly kept the benchmark interest rate and stance unchanged for the ninth straight policy meeting. Forex traders said weak domestic markets, surge in crude oil prices and foreign fund outflows weighed on the rupee. However, a decline in the US Dollar index prevented the local unit from declining sharply. At the interbank foreign exchange market, the local unit opened at 83.94 and touched an intraday low of 83.97 and a high of 83.93 against the dollar during the session. It finally settled at 83.96 (provisional) against the American currency, down 1 paisa from its previous close. On Wednesday, the rupee consolidated in a narrow range and settled for the day lower by 3 paise at 83.95 against US dollar. The local unit had slumped 37 paise to settle at an all-time low of 84.09 against the US dollar on Monday. "We expect the rupee to trade with a negative bias on selling pressure from foreign investors and weak domestic markets. Ongoing geopolitical tensions in the Middle East may also pressurise the rupee," said Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas. However, weak US dollar may support the rupee at lower levels. Any intervention by <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> may also support the rupee. "Traders may take cues from weekly unemployment claims data from the US. USDINR spot price is expected to trade in a range of Rs 83.75 to Rs 84.20," Choudhary said. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.12 per cent to 103.07 points. <keyword id="20025497" type="General" weightage="20" keywordseo="Brent-crude" source="keywords">Brent crude</keyword>, the global oil benchmark, was trading 0.78 per cent lower at USD 77.72 per barrel in futures trade. On the macroeconomic front, the Monetary Policy Committee (MPC) of the Reserve Bank kept the benchmark repurchase or repo rate unchanged at 6.50 per cent. Announcing the bi-monthly monetary policy review RBI Governor Shaktikanta Das said Indian rupee remained largely range-bound so far this financial year. The panel also decided to retain a policy stance at "withdrawal of accommodation" to aid MPC's focus on bringing inflation towards its 4 per cent target. The status quo by RBI comes amid varied central bank action in advanced economies. While the Bank of England reduced interest rates last week, the Bank of Japan hiked rates to their highest levels since 2008. Also, fears of a US recession have risen on the back of weak employment numbers, piling up pressure on the Federal Reserve to start cutting rates to support the economy. In the domestic equity market, the 30-share BSE Sensex fell 581.79 points, or 0.73 per cent, to close at 78,886.22 points, while the Nifty declined 180.50 points, or 0.74 per cent, to 24,117.00 points. Foreign institutional investors (FIIs) were net sellers in the capital markets on Wednesday as they offloaded shares worth Rs 3,314.76 crore, according to exchange data. SEE ALSO:<a href="https://www.businessinsider.in/business/news/ola-wants-to-re-enter-the-quick-commerce-business-to-take-on-blinkit-and-swiggy-instamart/articleshow/112364583.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/news/ola-wants-to-re-enter-the-quick-commerce-business-to-take-on-blinkit-and-swiggy-instamart/articleshow/112364583.cms" target="_blank">Ola wants to re-enter the quick commerce business to take on Blinkit and Swiggy Instamart</a><a href="https://www.businessinsider.in/finance/banks/news/rbi-mpc-meet-cheque-clearing-time-reduced-upi-limit-increased-for-tax-payment/articleshow/112366099.cms" target="_blank"></a> <a href="https://www.businessinsider.in/finance/banks/news/rbi-mpc-meet-cheque-clearing-time-reduced-upi-limit-increased-for-tax-payment/articleshow/112366099.cms" target="_blank">RBI MPC meet – Cheque clearing time reduced, UPI limit increased for tax payment</a><a href="https://www.businessinsider.in/business/auto/news/tata-curvv-ev-with-up-to-585-km-range-launched-starting-at-17-49-lakh/slidelist/112342769.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/auto/news/tata-curvv-ev-with-up-to-585-km-range-launched-starting-at-17-49-lakh/slidelist/112342769.cms" target="_blank">Tata Curvv EV with up to 585 km range launched starting at ₹17.49 lakh</a>

Rupee falls 1 paisa to close at 83.96 against US dollar

The <keyword id="19922074" type="General" weightage="20" keywordseo="Reserve-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank" meta.hostid="261" meta.entityid="Reserve Bank">Reserve Bank</keyword> is expected to hold its key rates at the forthcoming <keyword id="22706079" type="General" weightage="20" keywordseo="policy-review" source="keywords">policy review</keyword>, but may sound more confident about reaching its 4% inflation objective, a foreign brokerage said on Wednesday. The rate-setting panel may prefer to stick to the 'withdrawal of accommodation' stance of the <keyword id="20104157" type="General" weightage="20" keywordseo="monetary-policy" source="keywords">monetary policy</keyword>, HSBC said in the report on the eve of the <keyword id="19899808" type="General" weightage="100" keywordseo="RBI" source="keywords">RBI</keyword> <keyword id="19918491" type="General" weightage="20" keywordseo="MPC" source="keywords">MPC</keyword>'s decision. "While it's a close call, we also think the policy stance will remain unchanged, even as the RBI sounds more confident than before about getting to its 4% <keyword id="20661141" type="General" weightage="20" keywordseo="inflation-target" source="keywords">inflation target</keyword>," it said, listing out the aspects it will watch out for in the document or the resolution. These include any softness in tone around increased confidence of getting to 4% inflation durably, or a change in growth or inflation forecasts, and, further commentary around the use of OMO (open market operations) sales to take out excess liquidity. In the background of another member dissenting at the last policy review, the brokerage said the number of MPC members calling for a rate cut or change in stance will also be watched keenly. Apart from this, it said any more colour on the plans to change regulatory requirements on the <keyword id="20479869" type="General" weightage="20" keywordseo="liquidity-coverage-ratio" source="keywords">liquidity coverage ratio</keyword>, which is reported to have a bearing on banks' profitability, will also be watched, it said. On the stance questions, there are several points in support of softening from the current "hawkish" posturing, the brokerage said, adding that there are an equal number of aspects against such a move as well. Factors such as global turmoil, improving rains, soft core inflation, weaker credit growth and fiscal consolidation support a softening of the stance, while on the other side, there are competing ones like long wait for a durable fall in food inflation, loose financial conditions, OMO sales and growth being strong on the other side, it said.

RBI to hold rates, may sound more confident of reaching inflation target, says report

Mumbai: <keyword id="19949639" type="General" weightage="100" keywordseo="rupee" source="keywords">Rupee</keyword> <keyword id="19900989" type="General" weightage="20" keywordseo="trade" source="keywords">trade</keyword>d in a narrow range in morning trade on Wednesday, as the support from positive domestic equities was negated by strengthening of the American currency in the overseas <keyword id="19913381" type="General" weightage="20" keywordseo="market" source="keywords">market</keyword>. At the interbank foreign exchange market, the local unit opened at 83.86 but soon pared the gains to trade at 83.92, unchanged from its previous close. On Tuesday, the rupee recovered from its all-time low level and settled for the day 17 paise higher at 83.92 against the US <keyword id="19904292" type="General" weightage="20" keywordseo="dollar" source="keywords">dollar</keyword>. The local unit had slumped 37 paise to settle at an all-time low of 84.09 against the US dollar on Monday. Forex traders said risk aversion in the global markets, escalation of geopolitical tensions in the Middle East and outflows by foreign investors further dented investor sentiments. " Indian rupee is expected to open at 83.91 after a fall to 83.96 on Tuesday with dollar demand gaining traction but <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> selling dollars to keep rupee within 84 levels," said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP. For the day the rupee looks to be in a range of 83.85 to 84.05 but all depending on the Reserve Bank, as to where it wants the rupee to be in the coming days, Bhansali added. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, gained 0.28 per cent to 103.26 points. Brent crude, the global oil benchmark, rose 0.20 per cent at USD 76.63 per barrel in futures trade. "Brent oil prices dipped to USD 76.54 per barrel as mixed reading on inventories and demand concerns over slowing economic growth and weak demand kept prices under pressure," Bhansali said. In the domestic equity market, the 30-share BSE Sensex gained 642.04 points, or 0.82 per cent, to 79,235.11 points, while the Nifty increased by 233.75 points, or 0.97 per cent, to 24,226.30 points. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday as they offloaded shares worth Rs 3,531.24 crore, according to exchange data. Meanwhile, the Reserve Bank's rate-setting panel started its three-day deliberations for the next set of bi-monthly monetary policy on Tuesday amid expectations of no change in benchmark interest rate in view of concerns on inflation and economic growth remaining steady. The decision of the RBI Governor Shaktikanta Das-headed six-member Monetary Policy Committee (MPC) will be announced on Thursday.

Rupee trades in narrow range against US dollar in early trade

The rupee depreciated 6 paise to 83.45 against the US dollar in early trade on Friday, as market participants remained cautious ahead of the announcement of the <keyword id="6354335" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="Orion">Reserve Bank of India</keyword>'s rate-setting panel's decision. Forex traders said the local unit was also weighed down by a strong American currency and elevated crude oil prices. Moreover, a negative trend in domestic equities and sustained foreign fund outflows also dented investor sentiments. According to <keyword id="6515855" type="General" weightage="20" keywordseo="interbank-foreign-exchange" source="Orion">interbank foreign exchange</keyword>, the rupee opened at 83.44 against the dollar and touched a low of 83.45 in the initial trade, registering a fall of 6 paise over its previous close. On Thursday, the rupee recovered 14 paise to close at 83.39 against the US dollar. Traders said market participants are awaiting the <keyword id="30067" type="General" weightage="20" keywordseo="RBI" source="Orion">RBI</keyword> MPC policy decision for further cues. The <keyword id="19922074" type="General" weightage="20" keywordseo="reserve-bank" source="keywords">Reserve Bank</keyword>'s rate-setting panel on Wednesday started its three-day deliberations on the next set of monetary policy. The decision taken at the meeting of the Reserve Bank Governor Shaktikanta Das-headed Monetary Policy Committee (MPC) is scheduled to be announced later in the day. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 104.33, higher by 0.20 per cent. Brent crude futures, the global oil benchmark, rose 0.40 per cent to USD 91.01 per barrel. Forex traders said the rupee is likely to trade with a slight negative bias on the surge in crude oil and gold prices. Renewed geopolitical tensions in the Middle East and selling pressure from FIIs may also weigh on the rupee. On the <keyword id="1036447" type="General" weightage="20" keywordseo="domestic-equity-market" source="Orion">domestic equity market</keyword>, the 30-share BSE Sensex was trading 107.27 points, or 0.14 per cent lower at 74,120.36 points. The broader NSE Nifty was down 50.05 points, or 0.22 per cent, to 22,464.60 points. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth Rs 1,136.47 crore, according to exchange data. On the domestic macroeconomic front, India's services sector witnessed one of the strongest growth rates in over 13-and-a-half years in March on the back of strong demand that spurred sales and business activity.

Rupee falls 6 paise to 83.45 against US dollar in early trade

<ul><li><keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>’s MPC keeps <keyword id="6371181" type="General" weightage="20" keywordseo="interest-rates" source="Orion">interest rates</keyword> unchanged in the first policy of FY25.</li><li>Most experts had expected the RBI to maintain the status quo on interest rates.</li><li>A few, however, expected it to soften its hawkish forward guidance. </li></ul>The Indian central bank’s rate-setting panel, the <keyword id="6357126" type="General" weightage="20" keywordseo="monetary-policy" source="Orion">Monetary Policy</keyword> Committee (MPC), kept the repo rate unchanged at 6.5% on Friday. It remained focused on the withdrawal of accommodation in the first monetary policy of FY25. Both these decisions were taken with a majority of five to one. “Two years ago, around this time, when CPI inflation had peaked at 7.8% in April 2022, the elephant in the room was inflation. The elephant has now gone out for a walk and appears to be returning to the forest. We would like the elephant to return to the forest and remain there on a durable basis,” said Shaktikanta Das, governor of the Reserve Bank of India. The second advance estimate (SAE) placed real GDP growth at 7.6% for the recently concluded FY24 — the third successive year of 7 per cent or higher growth. RBI projects FY25’s real GDP growth at 7%. “Robust growth prospects provide the policy space to remain focused on inflation and ensure its descent to the target of 4%. Under these circumstances, monetary policy must continue to be actively disinflationary to ensure anchoring of inflation expectations and fuller transmission of the past actions,” said Shaktikanta Das, governor of the Reserve Bank of India. His speech pointed out that uncertainties in food prices continue to pose challenges especially as temperatures are expected to be above normal. The MPC remains vigilant to the upside risks to inflation that might derail the path of disinflation. “Elephant moves slowly, and last mile inflation tends to be sticky,” said Das at the RBI press conference. RBI sees FY25’s consumer price inflation (CPI) inflation, assuming a normal monsoon, at 4.5%. The RBI had repeatedly insisted that it intends to bring down retail inflation below 4%. “It is essential, in the best interest of the economy, that CPI inflation continues to moderate and aligns with the target on a durable basis. Till this is achieved, our task remains unfinished,” said Das pointing to frequent incidences of supply chain shocks. He also added that the crude oil price movements in the last few days. GDP growth &amp; inflation projections by RBI for FY25 <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Time period </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Real GDP growth </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">CPI inflation </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY25 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.5% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q1 FY25 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.9% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q2 FY25 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.9% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3.8% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q3 FY25 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.6% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q4 FY25 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.5% </td></tr></tbody><tbody></tbody></table> Hot inflation keeping RBI in wait-and-watch mode say economists This is the seventh consecutive policy review cycle where the MPC has chosen to keep the repo rate unchanged at 6.5%. Most experts have been expecting the RBI to maintain the status quo. Its current decision, most say, is a balanced approach towards growth while being vigilant over headline inflation. “This careful stance reflects concerns over potential inflationary pressures arising from volatile food prices, recent upticks in oil prices, and robust economic growth. While there was some anticipation of rate cuts by the end of 2024, the RBI seems inclined to adopt a wait-and-see approach before initiating a rate cut cycle,” says Sujan Hajra, chief economist &amp; executive director at Anand Rathi Shares and Stock Brokers. Volatile food inflation in the last few months has been worrying economists. The ongoing heatwave combined with the persistent El Niño impact brings back worries about cereal and pulse price hikes. While the wheat crop has by and large been harvested, vegetable prices also pose an additional worry. The Indian Meteorological Department (IMD) has predicted higher-than-normal maximum temperatures across the country this summer. While core inflation has been softening, in the last few days, crude oil prices have inched up to cross $90 per barrel. "The monetary policy stance announced today reflects that the RBI is evenly balancing the two divergent objectives of growth and inflation. It seems a case of full commitment to growth with an even higher commitment to inflation targets. I hope we will see sustained growth and softened inflation,” Anu Aggarwal, president &amp; head of corporate banking, Kotak Mahindra Bank. The RBI governor’s stance on bringing down inflation has made economists delay their rate cut expectations as far as Q3 of FY25. The Bank of Japan has recently ended its negative interest rate policy and the US Fed has also delayed its much anticipated easing cycle. Most economists believe that RBI policy is pegged to the Fed, especially in the last two years, even as it formally targeted inflation. “External dynamics have been fluid, implying that the policy prerogative needs to be flexible for ensuring financial stability. We maintain the RBI’s tone will slowly tiptoe to ‘Gracklish’ from the usual ‘Hawk-Dove’ signaling, implying a non-committal stance and limited definite forward guidance ahead,” said Madhavi Arora, lead economist, Emkay Global Financial Services.

We want the elephant of inflation to walk back to the forest: Shaktikanta Das

<ul><li><keyword id="67286" type="General" weightage="20" keywordseo="food-inflation" source="Orion">Food inflation</keyword> is expected to be elevated due to the heat wave’s impact on cereal and pulse prices.</li><li>Analysts mostly see shallow <keyword id="6752353" type="General" weightage="20" keywordseo="rate-cuts" source="Orion">rate cuts</keyword> that might come in the third quarter of FY25, as the inflation picture emerges.</li><li>The Indian economy’s Goldilocks moment is continuing and might weigh on GDP growth projections of FY25 at 7%. </li></ul>The ongoing heatwave conditions, and projections of a harsher summer, are likely to impact India’s agricultural output, leading to rising food inflation. This, among others, is expected to weigh heavily on the rate-setting panel or monetary policy committee (MPC) meeting that will start today. “We estimate food inflation to remain elevated above 7.5% in the first half of 2024 on the back of high cereals and pulses (legumes) inflation on the back of an ongoing heatwave in the country. Altogether, we estimate headline (retail) inflation to remain above 5% in 1H 2024,” says a report by Goldman Sachs. Core inflation, however, has been easing, and LPG price cuts are also expected to add to the disinflation process, albeit modestly. Most analysts expect inflation to average around 4.5% for FY25 — and cool after a spike in September. ‘Slightly soften hawkish forward guidance’ The Reserve Bank of India (<keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>) which intends to maintain retail inflation at around 4%, might go for possible interest rate cuts only in the third quarter of FY25, surmise analysts. “We believe the stance should continue to be withdrawal of accommodation. RBI might cut rates only in the third quarter of FY25, such rate cut cycle is likely to be shallow,” said a report by SBI Research. In the meantime, there is ample room for the central bank to hold rates. "We do not expect any change in the policy rate, but a probable explicit or implicit change in stance cannot be ruled out. RBI may acknowledge that core inflation is trending down,” Parijat Agrawal, head – fixed income at Union Mutual Fund, said on the April policy. Apart from softening core inflation, easing liquidity conditions are also expected to provide comfort to the central bank. Thanks to active interventions by the RBI, government spending over the last month has softened inter-bank rates and short-term borrowing rates for bank and non-bank entities. “Liquidity conditions have eased in the past few weeks, with ongoing balance of payments surpluses and pre-election spending likely to keep liquidity conditions in check,” says a report by Barclays. Goldman forecasts one 25 basis-point cut each in Q3 and Q4 of 2024. “We expect the RBI to take comfort from declining core inflation, slightly soften its hawkish forward guidance, but remain cautious given upside risks to food inflation from weather shocks, and repricing of the Fed funds rate easing path,” it added. Signs of slack in the economy The central bank ‘upgraded’ its GDP growth rate expectation for FY24 to 7.3%. It also expects FY25’s growth rate to average at 7%. The market is keenly looking forward to RBI’s commentary on growth projections. As of now, there has been a mixed growth picture. Every economic indicator comes with a rider attached, which Barclays calls ‘signs of slack’ in the economy. For example, the current account deficit (CAD) narrowed to 1.2% of GDP in Q3 FY24, from 1.3% in the previous quarter. While manageable CAD is good news, it also expands during high periods of growth. The government also projected its fiscal deficit to fall to 5.1% in FY25 as compared to 5.8% in FY24. These targets are to be achieved by moderation in government capex and lowering of expenditure. “The latter implies limited direct support to consumption demand from the budget, which, while positive for inflation, also means the fiscal impulse on growth has moderated compared with earlier years,” says Barclays. Economic indicators are also mixed. While cargo traffic, air passenger numbers, and toll collection are falling, vehicle sales are seeing double-digit growth in the last quarter of FY24. “High-frequency activity data remains strong, with our proprietary indices tracking a rebound in consumption growth at 7.9% yoy in Jan-March of 2024 (vs 3.5% in December quarter), but slower investment growth at 2.3% yoy (vs. 10.6% YoY in December quarter) as the government has front-loaded capex,” says Goldman Sachs. The Goldilocks moment of the Indian economy is raising expectations that the RBI might take a call based on the same. “Eventually, we think the RBI will have to consider the balance of risks between overtightening (given the 'not-too-hot-nor-too-cold' state of the economy) and maintaining monetary policy conditions for achieving reasonably good real GDP growth of at least 7%,” says Barclays.

With food inflation looming large, ‘shallow rate’ cuts expected only in Q3 FY25

Mumbai, <keyword id="19969771" type="General" weightage="20" keywordseo="crypto" source="keywords">Crypto</keyword> currencies cannot be referred to as "currencies" as they have no underlying value, a central bank official said. The <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>) has been critical of new-age currencies like bitcoins, saying they pose systemic risk to the financial systems. "Crypto currencies cannot be called currencies as they don't have any underlying value," P <keyword id="19944928" type="General" weightage="20" keywordseo="vasudevan" source="keywords">Vasudevan</keyword>, an executive director at the RBI, said during a panel discussion organised by IIM-Kozhikode here. Ultimately it is a call that the government has to take on how to tackle crypto currencies, the official said. Currently, bitcoins have no legal backing in India and investors have to pay a tax on the income earned by trading in them. In the backdrop of the action against <keyword id="19907220" type="General" weightage="20" keywordseo="paytm-payments-bank" source="keywords">Paytm Payments Bank</keyword> and curbs imposed on some international card providers, Vasudevan said self-regulation can protect the fintech sector better. He also said that mechanisms could be looked at to highlight bad behaviour.

Crypto currencies have no underlying value, says RBI official

<ul><li>The Monetary Policy Committee (<keyword id="19918491" type="General" weightage="20" keywordseo="mpc" source="keywords">MPC</keyword>) has decided to keep the repo rate unchanged at 6.5%. </li><li>Economists had expected the MPC to keep key rates unchanged due elevated inflation in December 2023.</li><li>A few experts hoped that it would change its stance to ‘neutral’ given the tight liquidity situation. </li></ul> The <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>)’s rate setting panel – the Monetary Policy Committee – decided to keep its key lending rate (repo rate) unchanged at 6.5% on Thursday. It also decided to remain focussed on the ‘withdrawal of accommodation’ stance. RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword> said that both the decisions have been taken with five out of six members voting in favour. Governor Das said there was further room for transmission. “Taking into account this growth-inflation dynamics and the fact that transmission of the cumulative 250 bps policy rate hike is still underway, the MPC decided to keep the policy repo rate unchanged at 6.50%. The MPC will carefully monitor any signs of generalisation of food price pressures which can fritter away the gains in easing of core inflation,” he said. The MPC also raised the FY24 real GDP growth projection to 7.3% from 7%. It also set FY25’s real GDP growth projections at 7%. “The momentum in economic activity seen in FY24 is expected to continue in FY25 as well,” Das said. It also projected FY25’s Q1 GDP growth at 7.2%, Q2 to see 6.8% growth, Q3 at 7% and Q4 at 6.9%. The MPC also retained FY24’s retail inflation projections at 5.4%, but set FY25’s inflation projections at 4.5%. It sees inflation for Q1 of FY25 at 5%, Q2 at 4%, Q3 at 4.6% and Q4 at 4.7%. “Monetary policy was supported by pro-active supply-side measures by the government. That said, the job is not yet finished, and we need to be vigilant about new supply shocks that may undo the progress made so far,” Das said. Das said that elevated levels of public debt was raising serious concerns in many economies including advanced economies. “On one hand, the odds of soft landing in the global economy increased. But the other hand, wars and conflicts add uncertainties to the outlook,” the governor said. Experts have been expecting the monetary policy committee (MPC) to keep its key rates unchanged. India’s retail inflation for December 2023 came in at 5.7%, which is much higher than RBI’s comfort level of 4%. “We expect the RBI to continue the pause stance in the upcoming policy. Strong US non-farm payroll data and wages seem to have pushed back on market expectations for a quick pivot to rate cuts. First rate cut on table from June or August 2024 looks the best bet now,” said a report by SBI Ecowrap. Ajit Kabi, research analyst at LKP Securities said that the RBI is likely to support economic growth with a cautious stance on inflation. “Consequently, we expect the unchanged policy rate and possibility of a shift in stance to NEUTRAL. Additionally, RBI may take steps to improve liquidity conditions. We expect a policy rate cut by June 24,” he added. There has been a pressure of liquidity which made a few experts hope that it could change its stance from ‘withdrawal of accommodation’. “There is a strong case for the RBI to change its stance from ‘withdrawal of accommodation’ to ‘neutral’. Financial conditions have tightened a lot in the last few quarters. Real rates are reasonably high and likely to increase further as inflation is trending down,” said Pankaj Pathak, Fund Manager- Fixed Income, Quantum AMC. While growth in deposits is much higher than last year on YTD basis as of January 12, the increase in credit and investments at ₹22.25 lakh crore is higher than that of deposits at ₹18.2 lakh crore. In terms of growth rates on a year-to-date basis, says Bank of Baroda data. Liquidity condition has also tightened with banking system liquidity running in deficit of over ₹2 lakh crore on daily basis. “Under these conditions there is some part of the market segment that believes that a change in stance is possible, though we believe that this will not be the case. The fact that the corridor of call rates is being maintained at between repo and Marginal Standing Facility (MSF0 rate, is indicative of the fact that the withdrawal of liquidity position would continue,” said <keyword id="20102121" type="General" weightage="20" keywordseo="madan-sabnavis" source="keywords">Madan Sabnavis</keyword>, chief economist at Bank of Baroda.

RBI hikes GDP growth projection for FY24 to 7.3%, keeps rates, stance unchanged

<ul><li>Bank lending to NBFCs was growing at 24-25% y-o-y, whereas the rest of the system was growing at 12-14%. </li><li>Interconnectedness is building in the system and <keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword> moves intend to address that. </li><li>RBI governor said that its preemptive measures are intended to proactively take action before the bubble bursts.</li></ul>India’s central bank intends to cut down consumption led-loans given out by banks and shadow banks. Reserve Bank of India’s deputy governor <keyword id="10055827" type="General" weightage="50" keywordseo="swaminathan-janakiraman" source="Orion">Swaminathan Janakiraman</keyword> said that its intention behind increased risk weightage on unsecured loans is to cut down growth of loans which do not have a clearly defined end use. Some segments’ growth within NBFCs are outliers, and the measures taken are to address that. <keyword id="162353" type="General" weightage="80" keywordseo="swaminathan" source="Orion">Swaminathan</keyword> insists that per se, small ticket loans are no risk to the system. “The loans in the under ₹50,000 segments is less than half a percent of total outstanding. They may be dealing with a lot of people, it’s a segment that cannot pose a great risk to the system,” he said while speaking at the post-monetary policy press conference on Friday. Last month, RBI asked banks and non-banking financial institutions (NBFCs) to provide more for unsecured loans, under which personal loans are covered. This measure also addresses interconnectedness building in the system where banks are lending to NBFCs. Bank lending to NBFCs was growing at 24-25% y-o-y, whereas the rest of the system was growing at 12-14%. “Bank lending to NBFCs had to be re-caliberated. The idea is not to deny liquidity or ration the lending,” said Swaminathan. He also added that the business models of some of these institutions will be re-caliberated along with their growth numbers. “Risk measure protection and underwriting practices are getting better. It’s too early to comment on the effect it has had. Governance and effectiveness of assurance functions is top of our priority. You will hear more from us on that,” said the deputy governor. <cmsannotation type="cmsannotation" annotationid="To take action before bubble bursts" comment="subhead" text="To take action before bubble bursts">To take action before bubble bursts</cmsannotation> The RBI governor <keyword id="6359111" type="General" weightage="50" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> also insisted that this move is a preemptive measure to address potential risks. “We don’t wait for the house to catch fire and then act. Our effort is to proactively take action before the bubble bursts,” Das said in his speech. Apart from keeping policy rates unchanged, the RBI’s rate-setting panel also remained focussed on withdrawal of accommodation. It has also kept its projections on inflation for FY24 unchanged at 5.4%, and also warned that the November print of inflation might come in higher. Inflation management cannot be on auto-pilot even as the future is expected to be clouded by uncertain food prices. But Das also said that summer of 2022 is behind us. The RBI also increased its GDP growth projection for FY24 to 7% from 6.5% earlier. “There is growing international confidence in the Indian economy, as we speak to other central bank governors and some large investors. There is confidence from the point of view of investment, quality of Indian products and its service exports,” Das said at the conference. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/rbi-expects-indias-gdp-to-grow-at-7-in-fy24-keeps-repo-rate-unchanged/articleshow/105828012.cms">RBI expects India’s GDP to grow at 7% in FY24; keeps repo rate unchanged</a> <a href="https://www.businessinsider.in/finance/news/rbi-hikes-upi-transaction-limit-for-education-and-healthcare/articleshow/105832824.cms">UPI transaction limit for education and healthcare hiked to ₹5 lakh per day</a>

We’d like to curtail consumption-led loans with no clear end use: RBI Dy Governor

<ul><li>India’s inflation outlook has changed in the last few months due to rising vegetable prices along with a few pulses and grains.</li><li>While MPC is expected to increase its inflation projections it might not rush into a rate hike in August, economists say.</li><li>While central banks of developed economies are still hiking interest rates, developed economies are actively decoupling. </li></ul>Even those who aren’t keeping a keen eye on inflation would have noticed the surge in food prices in the last few months and their effect on Indian household budgets. However, economists believe that in the upcoming August meeting, <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword>’s Monetary Policy Committee (MPC) is likely to keep base interest rates unchanged. In the last few months, there have been many inflation shocks, especially with regards to rising tomato prices along with that of a few pulses and grains. According to a report by Crisil, the cost of a vegetarian thali went up by 28% and non-vegetarian thalis went up by 11% in July, as compared to June. “Over the past month, surging food prices have changed India’s inflation outlook. While vegetable prices should eventually cool, pulse and cereal prices could prove stickier. We now expect headline inflation to rise to 6-6.5% in July/August, from 4.8% in June, before settling in a 5-6% range for the rest of FY24,” said Nomura. ‘Policy settings on hold’ Though prices are skyrocketing, most economists believe that the food inflation is transitory or seasonal. Moreso, core inflation has been steady and wholesale price inflation too has been cooling off, providing comfort. All these factors indicate that the MPC will keep interest rates paused like it did in the last two meetings. “We expect the MPC to keep the repo rate unchanged at 6.5% at the 10 August meeting, flagging resilient economic growth, and anchored underlying inflation as reasons to monitor incoming economic data, while keeping policy settings on hold,” said Rahul Bajoria, MD &amp; head of EM Asia (ex-China) economics at Barclays. The RBI may not want to hurry to cut rates, says Deepak Jasani, head of retail research at HDFC Securities. “Inflation could remain elevated in July and August and if the El Nino pattern plays out in the latter half of the monsoon, this era of high inflation could continue till the end of this calendar. Oil prices globally have also started to inch up. However, we do not expect the RBI to jump the gun and resume rate hikes in its August meeting,” he added. The MPC is also expected to maintain its status quo on its "withdrawal of accommodation" stance as well. However, economists do expect the RBI to alter its inflation projections for the year, while keeping growth projections intact. “There are no new major headwinds to growth projections. Stronger than expected momentum in domestic investments resulted in major international agencies like IMF revising up India's growth projections to 6.1% from 5.9% earlier this year. We expect RBI to maintain its growth projections at 6.5% for FY24,” said a report by CARE Edge. Mixed messages from global markets While most nations across the globe had started increasing interest rates around May last year to tackle the global inflation problem — they have been coming off it in a varied manner. The world’s largest economy, the US, seems to be in the midst of more interest rate hikes. The US Fed hiked its policy rate by 25 bps last month, and experts expect a few more going ahead. The Bank of England and European Central Bank are still hiking policy rates but a few central banks of emerging markets like China and Brazil have already started their rate-cutting journey. “Recent developments show early signs of a monetary policy decoupling globally influenced by different macroeconomic conditions,” says CARE Edge. India however can go either way as the RBI Governor <keyword id="6359111" type="General" weightage="50" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> has repeatedly said that it was a pause not a pivot in the earlier MPC meeting outcome. Most economists in India too had hoped for rate cuts in the <a href="https://www.businessinsider.in/finance/news/with-inflation-cooling-rbi-may-slash-interest-rates-by-50-bps-this-financial-year/articleshow/100531780.cms">second half of the current financial year</a>, but quickly tempered their hopes after the change in inflation dynamics. Along with a stable currency, large FPI inflows and narrowing trade deficit there are uncertainties like an erratic monsoon and El Nino conditions which may yet play out. In such a scenario, the Shaktikanta Das led panel will have to balance the growth momentum and yet stick to its mandated inflation watch. Tricky, to say the least. MPC decisions in 2023 <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Meeting </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Base rates </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">June meet </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Rates kept unchanged </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April meet </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Rates kept unchanged </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">February meet </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Rates hikes by 25 basis points to 6.5% </td></tr></tbody></table>

RBI MPC expected to ‘pause and watch’ how inflation plays out

<ul><li>The Reserve Bank of India’s Monetary Policy Committee (<keyword id="6369693" type="General" weightage="100" keywordseo="mpc" source="Orion">MPC</keyword>) is likely to pause rate hikes when it meets later this week, as per economists. </li><li>The broad consensus is that a prolonged pause on rates may be seen till the end of 2023. </li><li>Economists say that India is in a ‘goldilocks’ situation thanks to strong macroeconomic data and cooler inflation. </li></ul>The Reserve Bank of India’s Monetary Policy Committee (MPC) could/should decide to pause interest rate hikes when it meets later this week, as per eminent economists. The consensus on the street is that the <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword> Governor Shaktikanta Das-led panel will keep the repo rate unchanged at 6.5% thanks to cooler inflation. The primary reason for this belief is that the retail inflation (based on consumer price index, or CPI), came in significantly lower at 4.7% in April this year, down from 5.66% in March. This is comfortably below the central bank’s upper tolerance limit of 6%. In addition to cooler inflation, uncertainty around the trends in global commodity prices and growth could push the MPC to maintain its ‘wait and watch’ approach for the time being. The crucial monsoon season beginning this month and the impact of a potential El Niño will also figure in the MPC’s decision-making process. “We expect the stance to be maintained this month as the MPC will prefer to stay on wait-and-watch mode to gauge the fallout of weather conditions on the price trend before considering a pivot to easing. Supportive recovery prospects also lower the urgency for a quick turn in the policy direction,” said Radhika Rao, executive director and senior economist, DBS Group. The sticky core inflation finally fell below the 6% mark for the first time in 19 months in April to 5.2%. RBI governor <keyword id="6359111" type="General" weightage="50" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> has underlined his concerns about sticky core inflation for a long time now, so this fall is much needed. <cmsannotation type="cmsannotation" annotationid="Prolonged pause" comment="subhead" text="Prolonged pause">Prolonged pause</cmsannotation> The broad consensus amongst economists is that the MPC will maintain its rate pause stance for the second consecutive time, after breaking away with the US Fed’s FOMC and keeping the<a href="https://www.businessinsider.in/finance/news/rbis-monetary-policy-committee-keeps-repo-rate-unchanged-at-6-5/articleshow/99284354.cms"> rates unchanged in its April meeting</a>. “Considering the prevailing ambiguity surrounding the future path of the Federal Reserve's rates in the coming months, our perspective leads us to anticipate a dovish message from the MPC,” said Deepak Agrawal, chief investment officer, debt, Kotak Mahindra AMC. Agrawal added that the focus is now on whether the MPC will signal a pivot in its monetary policy or continue with its current stance of withdrawal of accommodation. <cmsannotation type="cmsannotation" annotationid="The long-pause" comment="subhead" text="The long-pause">The long-pause</cmsannotation> With that said, there is a consensus amongst economists that we could be in for a prolonged pause, likely extending to the end of 2023. “We maintain our baseline view that the RBI will likely keep the policy repo rate unchanged at 6.50% in the June 8 policy meeting. We expect the RBI to remain on hold till the end of the year,” said the analysts at Goldman Sachs. <cmsannotation type="cmsannotation" annotationid="Stronger growth, cooler inflation" comment="subhead" text="Stronger growth, cooler inflation">Stronger growth, cooler inflation</cmsannotation> India’s GDP growth sprung a ‘pleasant surprise’ in Q4, coming in at 6.1% while analysts had forecast a growth of just 5%. In FY23, too, the GDP numbers at 7.2% were ahead of even the government’s estimates of 7%. Goldman Sachs analysts say that the inflation print in Q1 could be around 4.6%, as against RBI’s estimates of 5.1%. With April print coming in at 4.7%, there is further room for decline in May and June prints. Apart from this, most economic indicators across agriculture, manufacturing and services sectors are holding up, according to economists. According to the economists at SBI Research, we could see an upward revision in GDP growth forecasts while inflation estimates are expected to be downgraded in the June MPC meeting. “Frontloaded rate action by RBI has resulted in frontloading inflation trajectory. Inflation data till October would be decisively below 5%,” SBI Research said. Economists say that India is in a ‘goldilocks’ situation thanks to robust macroeconomic activity and cooling inflation. While a rate pause is highly certain, any hints of a pivot in monetary policy will be closely watched. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/wedding-season-drives-hero-motocorp-and-bajaj-auto-sales-in-may/articleshow/100700290.cms">Wedding bells drive two-wheeler sales in May, passenger vehicles cruise on SUVs</a> <a href="https://www.businessinsider.in/india/news/indias-gdp-forecast-raised-but-el-nino-export-contraction-threats-hover/articleshow/100693955.cms">India’s GDP forecast raised but El Nino, export contraction threats hover</a> <a href="https://www.businessinsider.in/stock-market/news/foreign-institutional-investors-pump-27856-crore-in-indian-equities-in-may/articleshow/100693791.cms">Dalal Street sees 27-month high inflows from FIIs in May</a>

You Searched For "RBI panel" and got 14 results

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RBI MPC expected to ‘pause and watch’ how inflation plays out

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RBI monetary policy: MPC likely to keep the pause-button pressed

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