MPC Meet Live Updates: RBI Governor-led monetary policy committee kept key rates steady
Reserve Bank of India (RBI) Governor Shaktikanta Das announced the policy decision today, at the end of the scheduled review of the Monetary Policy Committee (MPC) that began on Wednesday, October 6, as it evaluates the economy at a time when there is a steady pick-up in activity and a calculated progress in the vaccination drive - with a quarter of India's adult population being fully vaccinated and almost 71 per cent partially vaccinated, amid the COVID-19 pandemic.
RBI's monetary policy committee voted 5:1 to maintain the repo rates - the key interest rates at which the RBI lends money to commercial banks - steady at four per cent. The reverse repo rate - the rate at which the RBI borrows money from banks, was also unchanged at 3.35 per cent.
The central bank retained the gross domestic product (GDP) growth projection for the current fiscal at 9.5 per cent, however, it trimmed the CPI inflation projection to 5.3 per cent from 5.7 per cent for the fiscal, on the inflation trajectory being more favourable than expected.
This was the fourth bi-monthly monetary policy review for the financial year 2021-22 when the central banking authority seeks to support the recovering economy after the shock of the second wave, even as rising fuel prices amid a looming global energy crisis adds further inflation risks.
India's economy grew by 20.1 per cent in the first quarter (April-June) of the current financial year. The sharp jump in the gross domestic product (GDP) was mostly aided by the low base effect as the economy had contracted by a record 24.4 per cent in the year-ago period.
Here are all the highlights from today's RBI Governor Shaktikanta Das-led Monetary Policy Committee meeting:
Next RBI Monetary Policy Meeting To Be Held In December 2021The next meeting of the RBI Monetary Policy Committee MPC is scheduled to be conducted during December 6 to 8, 2021.
RBI Monetary Policy LIVE: Here's what analysts say on policy statement''While continuing with the accommodative stance with 5-1 vote, it has signalled the end to continued monetary easing by announcing a calendar for Variable Rate Reverse Repo (VRRR) and a proposal for fortnightly 14-day VRRR auctions.
With greater restraint on the inflation front, the MPC has decided to support growth by continuing with the status quo. With growth concerns continuing in contact intensive sectors and with the commercial credit by the banking system continuing to be tepid, we do not expect policy reversal in the immediate future,'' said Dr M Govinda Rao, Chief Economic Advisor, Brickwork Ratings.
MPC Meet Live: RBI Governor Shaktikanta Das Addresses Post-Policy Press ConferenceRBI Governor Shaktikanta Das is addressing a post-policy press conference at 12 noon today. He will address queries related to the bi-monthly Monetary Policy Committee decisions taken today and other key decisions announced by the central bank.
MPC Meet Live Updates: Next bend on the policy road will be a reverse repo rate hike, say analysts''The announcement of a complete tapering off of the RBI's quantitative easing programme coupled with an expansion of the scope of the VRRR operations, is a clear sign that liquidity normalisation is now on the offing.
We maintain that India is on a path of an inflationary recovery - while the cyclical growth recovery is ongoing, upside risks to inflation have further risen, especially with the latest surge in commodity prices. Consequently, in our view, the next bend on the policy road will be a reverse repo rate hike to normalise the policy corridor, and then a pivot towards rate hikes in 2022,'' said Dr. Aurodeep Nandi, India Economist & Vice President at Nomura.
RBI Monetary Policy LIVE: Elevated crude oil prices adding input cost pressures
RBI Governor Shaktikanta Das announced that the elevated crude and commodity prices are adding to the input cost pressures, and that the core inflation remains sticky. He added that the aggregate demand is increasing but slack still remains. The central bank trimmed the CPI inflation forecast for the current fiscal to 5.3 per cent from 5.7 per cent. The July-September CPI inflation is lower than anticipated, according to Mr Das.
RBI Monetary Policy LIVE: Policy used as a lever to prepare markets for normalisation, say analysts''The RBI's stance on liquidity management was the most watched for. As expected, the RBI did not shock the system with a reverse repo hike, and the policy is well used as a lever to prepare markets for a gradualist approach toward normalization through both communication and action.
Expectedly, markets are still assuaged that no premature tightening of financial conditions will happen and the orderly government borrowing and evolution of YC will be ensured. While the tenor and quantum of VRRR have increased, RBI has moved a step ahead by reducing further active liquidity infusion by not announcing new GSAP calendar after sterilising earlier two instalments with a simultaneous sale of bonds (OTs).
While GSAPs may discontinue or get shallow and sterilized ahead, other tools like (1) possible higher intervention via the FX forwards route, and (2) partly rolling over its maturing forwards book. will remain preferred tools for liquidity management ahead,'' said Ms. Madhavi Arora, Lead Economist, Emkay Global Financial Services.
RBI Monetary Policy LIVE: Special long-term repo ops of banks to be extended till December 31
The special long-term repo operation (LTRO) of small banks is extended till December 31, 2021, announced RBI Governor Shaktikanta Das. RBI will also introduce a framework for retail digital payments in the offline mode.
RBI Monetary Policy LIVE: Need to monitor inflation very closely in next few months, say analysts"While there has been no changes in any of the benchmark rates whatsoever, the central bank has indicated its willingness to make a 'gradual' adjustment to the excess liquidity in the monetary system which currently stands at over Rs 9 lakh crore.
RBI may also consider introduction of a 28 day VRRR, if necessary to further calibrate the liquidity levels. Importantly, the G-SAP programme to purchase govt securities from the market has been ceased for now to ensure that there is no further infusion of liquidity.
The plan is to reduce the surplus system liquidity from the current high levels to around Rs 2-3 lakh crore by the end of the current quarter.
What is also important is that the RBI has reduced its forecasts for the headline inflation to 5.3 per cent from 5.7 per cent in FY22 based on the current moderation in the liquidity trajectory.
While food inflation is expected to remain low, we believe there is a case to monitor inflation very closely over the next few months given the continuing commodity price pressures, industrial raw material shortages and the impending recovery in consumer demand,'' said Mr. Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.
RBI Monetary Policy LIVE: RBI likely to open option of 28-day VRRR auctions Depending upon the evolving liquidity conditions and the pace of government expenditure, the RBI may consider complementing a 14-day variable rate reverse repo (VRRR) actions with 28-day VRRR auctions. VRRR should not be interpreted as a reversal of accommodative policy stance, said the RBI Governor. The variable reverse repo (VRR) auctions to be stepped up fortnightly from Rs 4 lakh crore to Rs 6 lakh crore.
RBI Monetary Policy LIVE: Propose to hike IMPS transaction limit to Rs 5 lakh
RBI Governor Shaktikanta Das said that the committee proposes to increase the per-transaction IMPS limit to Rs 5 lakh from Rs 2 lakh currently. The RBI also proposed to introduce a framework for leveraging geo-tagging technology on all new and existing payment infrastructure.
RBI Monetary Policy LIVE: Need for undertaking further G-SAP operations does not arise
RBI Governor Shaktikanta Das announced that a further need for undertaking G-SAP operations does not arise, while addressing the monetary policy statement today.
RBI Monetary Policy LIVE Updates: Inflation trajectory more favourable than expected
The inflation trajectory is more favourable than anticipated, said RBI Governor Shaktikanta Das, while addressing the monetary policy statement today.
RBI Monetary Policy LIVE: Economic output still below pre-Covid level
RBI Governor Shaktikanta Das announced that economic output is still below the pre-Covid level. He added that the high frequency indicators show that during the second quarter economic activity has gained momentum.
RBI Monetary Policy LIVE Updates: CPI inflation trimmed to 5.3% for current fiscalRBI Governor announced that the consumer price index (CPI) inflation is projected at 5.3 per cent for the current financial year 2021-22. In the second quarter of current fiscal, inflation is seen at 5.1 per cent, at 4.5 per cent in the third quarter, and at 5.8 per cent in the fourth quarter of the fiscal.
MPC Meet Live Updates: RBI Targets GDP Growth at 17.1 per cent for first quarter of next fiscal
RBI Governor Shaktikanta Das said that the gross domestic product (GDP) growth projected for the first quarter of the next financial year 2022-23 is projected at 17.1 per cent.
RBI Monetary Policy LIVE: RBI retains GDP growth projection at 9.5 per cent for current fiscalRBI Governor Shaktikanta Das said that the gross domestic product (GDP) growth projected for the current fiscal 2021-22 is retained at 9.5 per cent. The RBI Governor added that the growth is projected at 6.8 per cent in third quarter, and 6.1 per cent in fourth quarter of the financial year
RBI Monetary Policy LIVE: Monetary Policy Committee keeps key rates unchangedThe Reserve Bank of India's monetary policy maintained the repo rates - the key interest rates at which the RBI lends money to commercial banks - steady at four per cent. The reverse repo rate - the rate at which RBI borrows money from banks, was also unchanged at 3.35 per cent. The monetary policy committee voted 5:1 to maintain an accommodative stance and keep the key rates unchanged, said RBI Governor Shaktikanta Das.
RBI Monetary Policy LIVE: RBI Governor Shaktikanta Das begins monetary policy addressRBI Governor Shaktikanta Das began addressing the monetary policy statement at 10:00 am on Friday, August 6. A post policy press conference will be telecast at 12:00 noon today
RBI Monetary Policy LIVE: Here's what analysts expect''With a mixed bag in terms of both growth and inflation outlook, the RBI and MPC will want to wait for a clearer picture. But as the economy recovers, and given the financial stability perspective, it is also essential to gradually withdraw the excess liquidity and reverse an ultra-low interest rate regime with likely incipient asset price dislocations.
The RBI needs to telegraph a path of normalization rather than let market expectations anchor unsuitably. The RBI has rightly focused on the near-term till now, and the October policy will be the perfect window to outline its thoughts on normalization, especially since the RBI will certainly want to avoid any sudden tightening,'' said Suvodeep Rakshit, Senior Economist at Kotak Institutional Equities.
RBI Monetary Policy LIVE: RBI increases inflation projection to 5.7 per cent in last policy
RBI Governor Shaktikanta Das had increased the CPI inflation estimate for the current fiscal to 5.7 per cent from 5.1 per cent in the last policy statement due to inflationary concerns. RBI Governor added that inflation may remain close to the upper tolerance band up to the second quarter of current fiscal, however pressures should decline in the third quarter on account of kharif harvest arrivals and as the supply side measures take effect.
RBI Monetary Policy LIVE: Banking stocks in focus todayThe shares of private banks and PSU will be in focus today amid market hours, as the Reserve Bank of India will announce key decisions on interest rates and liquidity measures. Ahead of the policy announcement, the stock markets opened higher as the Sensex rose 297 points and Nifty 50 index was trading firmly above its important psychological level of 17,850.
MPC Meet Live Updates: Moody's upgraded India's rating to 'stable' from 'negative'
Moody's upgraded India's rating outlook to "stable" from its earlier "negative" outlook. The global rating agency said that the economic recovery is in progress as activity is gradually picking up and spreading across sectors. Moody's had last year downgraded India's rating from Baa2 to Baa3, observing that it could face difficulties in implementing policies to mitigate risks of a sustain period of low growth.
MPC Meet Live Updates: RBI maintained status quo on lending rates for 7 times in a row
In the last meeting held on August 6, RBI Governor Shaktikanta Das-led Monetary Committee maintained the status quo for the seventh time in a row, keeping the lending rates steady. The RBI has maintained repo rate at a record low of four per cent since May 2020. It had last cut the policy rates on May 22, 2020 in an off-policy cycle to support the economy from the aftershock of the pandemic.
RBI Monetary Policy LIVE: Services industry expanded for the 2nd straight month in September
The country's services industry expanded for the second straight month in September 2021, driven by an improved domestic demand and easing Covid-19 restrictions, pushing companies to hire more employees for the first time in nearly a year. The IHS Markit Services Purchasing Managers' Index eased to 55.2 in September from August's 18-month high of 56.7, but stayed comfortably above the 50-mark separating growth from contraction.
RBI Monetary Policy LIVE: Market participants keep an eye on RBI's liquidity guidance
Market participants will keep a close watch on the central bank's guidance on liquidity withdrawal, given that surplus cash in the banking system recently topped the Rs 10 trillion mark. Many also expect the RBI to announce additional bond purchases. The banking regulator has already bought bonds worth Rs 2.05 trillion in this fiscal year as part of the government's securities acquisition program.
RBI Monetary Policy LIVE: October policy expected to signal end of 'excessive' Covid-era, say analysts"The MPC in the October policy is expected to signal the end of 'excessive' Covid-era accommodation amidst a steady pick-up in economic activity and progress in vaccination. The unrelenting build-up in inflationary pressures, even if deemed transitory, is likely to elicit a measured central bank response - especially on the surplus banking system liquidity.
Going forward, we expect the repo rate, which ceased to be the operating rate since the pandemic, to regain its status as the key policy rate through a gradual and guided transition.
We expect that an emphasis on a dovish, gradual Taper, coupled with expected G-SAP 3.0 announcement, should keep any undue bond market volatility under check,'' said Churchil Bhatt, EVP Debt Investments, Kotak Mahindra Life Insurance Company Limited.
RBI Monetary Policy LIVE: RBI retained GDP growth projection to 9.5 per cent in last policy meetingIn the last bi-monthly monetary policy committee meet held in August 2021, the Reserve Bank of India retained the gross domestic product (GDP) growth projections for the financial year 2021-22 at 9.5 per cent. Earlier, it had trimmed the growth projection from 10.5 per cent to 9.5 per cent.
RBI Monetary Policy LIVE: Here's what analysts expect"Central bankers across the world are the cusp of easy money giving way to a normalising process. India policy makers too will have to weigh in data ranging from manufacturing PMI, tax collections, balance of payments etc which are recovering, to inflation which may continue to surprise on the downside for next few months.
The central banker may want to follow Zor ka jhatka dheere se, hence make amends to VRRR amount and tenor (increase) and also announce Operation twist (OT) in place of outright bond purchases. This seems in sync with their 'orderly evolution' of the yield curve narrative. We expect a status quo in rates for now, with guidance towards narrowing the repo and reverse repo corridor going forward,'' said Lakshmi Iyer, CIO (Debt) & Head Products, Kotak Mutual Fund.
RBI Monetary Policy Updates: Central bank may keep repo rate unchangedThe RBI monetary policy committee is widely expected to keep the repo rate unchanged to support recovering growth but some analysts have cited a slim chance of a token increase in the reverse repo rate - the rate at which the RBI borrows from banks.
In a recent poll conducted by news agency Reuters, all 60 economists who took part in the survey see no change in the repo rate. Even though price pressure has soared due to the rising fuel prices, the RBI is only expected to raise the repo rate in April-June 2022.
RBI Monetary Policy LIVE: Where to watch RBI monetary policy statement
RBI Monetary Policy LIVE Updates: RBI Governor To Deliver Monetary Policy Address At 10:00 AMReserve Bank of India (RBI) Governor Shaktikanta Das will deliver the Monetary Policy review statement at 10:00 am today (October 8, 2021). The RBI Governor will also address a post-policy press conference at 12 noon.
RBI Monetary Policy Decision Today: RBI Monetary Policy Decision TodayReserve Bank of India (RBI) Governor Shaktikanta Das will announce the fourth bi-monthly Monetary Policy Committee (MPC) statement of the financial year 2021-22 today.