LIVE: RBI Monetary Policy Review Outcome - Another rate hike of 50 bps announced! What all MPC recommended - Key things to know
LIVE UPDATES: RBI Monetary Policy Review MPC Meeting: RBI Governor Shaktikanta Das has announced the MPC decision. Here are all the LIVE UPDATES on RBI Monetary Policy Review MPC Meeting:-
LIVE UPDATES: RBI Monetary Policy Review MPC Meeting: RBI Governor Shaktikanta Das has announced the MPC decision. RBI has hiked the benchmark lending rate by 50 basis points to 5.90 per cent. The Reserve Bank's rate-setting panel had started its 3-day deliberations on Wednesday amid expectations of yet another rate hike of 50 basis points to check high inflation, in line with similar actions taken by other major central banks, including the US Fed. Based on the recommendations of the Monetary Policy Committee (MPC), the RBI had effected 50 basis points increase in repo rate each in June and August after raising the short-term lending rate by 40 basis points in an off-cycle decision in May. Here are all the LIVE UPDATES on RBI Monetary Policy Review MPC Meeting:-
Latest Updates
RBI retains inflation projection for FY23 at 6.7 pc
The Reserve Bank on Friday retained its inflation projection for current fiscal year at 6.7 per cent amid global geopolitical developments triggered by Russia-Ukraine war. RBI Governor Shaktikanta Das said the impact of inflation globally is weighing heavily on the domestic market.
For September quarter of 2022-23, RBI projected retail inflation at 7.1 per cent.
For third quarter, inflation is estimated at 6.5 per cent and further down to 5.8 per cent in March quarter with risks evenly balanced, the governor said.
For first quarter of next fiscal year, retail inflation is forecast at 5 per cent. The RBI on Friday raised the benchmark lending repo rate by 50 basis points to 5.9 per cent. The central bank has the mandate to keep retail inflation in a band of 2-6 per cent.
RBI cuts growth forecast to 7% for current fiscal
The Reserve Bank of India on Friday slashed the growth projection to 7 per cent for the current fiscal from the earlier forecast of 7.2 per cent, citing aggressive tightening of monetary policies globally and moderation in demand. Unveiling the fifth monetary policy for this fiscal, RBI Governor Shaktikanta Das said the central bank remains committed to price stability to put the country on the sustained path of growth.
Real GDP growth in the first quarter of the current fiscal was 13.5 per cent.
Das, however, cautioned that there is a third wave of shock globally triggered by aggressive monetary policy tightening to curb inflation.
The central bank in April slashed the real GDP growth projection to 7.2 per cent from its earlier forecast of 7.8 per cent for 2022-23.
The latest RBI action follows the US Federal Reserve effecting the third consecutive 0.75 percentage point interest rate increase, taking its benchmark rate to a range of 3-3.25 per cent earlier this month.
Das retained the inflation projection at 6.7 per cent for the current fiscal while slashing real GDP growth estimate to 7 per cent from earlier forecast of 7.2 per cent for FY'23.
The Consumer Price Index (CPI) based inflation, which RBI factors in while fixing its benchmark rate, stood at 7 per cent in August. Retail inflation has been ruling above the RBI's comfort level of 6 per cent since January this year.
The six-member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das decided in favour of the rate hike.
This is the fourth consecutive rate hike after a 40 basis points increase in May and 50 basis points hike each in June and August. In all, RBI has raised benchmark rate by 1.90 per cent since May this year.
With the latest hike, the repo rate or the short term lending rate at which banks borrow from the central bank is now close to 6 per cent.
The Reserve Bank of India (RBI) on Friday raised the benchmark lending rate by 50 basis points to 5.90 per cent in a bid to check inflation, which has remained above its tolerance level for the past 8 months.
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RBI Governor announces 50 bps hike
WATCH RBI Governor Shaktikanta Das' address LIVE - ZEE BUSINESS LIVE TV
Shaktikanta Das speech Live updates: RBI Governor announces MPC decision - ANOTHER RATE HIKE!
RBI Monetary Policy Meeting LIVE: Governor Shaktikanta Das begins his address
RBI Governor Shaktikanta Das will announce the decision of the MPC meeting on repo rate hike shortly. His address will begin at 10 AM.
Stock Market: Sensex, Nifty extend fall ahead of RBI policy outcome. Sensex declines 262.73 points to 56,147.23 in early trade. Nifty falls 70.4 points to 16,747.70. Tata Motors, HDFC twins among top drags.
The MPC, headed by RBI Governor Shaktikanta Das, is meeting from September 28 to 30. The decision will be announced on Friday (September 30) at 10 AM.
According to Emkay Global, the RBI is set to deliver another front-loaded 50bps hike this week. While there are merits in favoor of a 35bps hike (nascent credit cycle, limited fiscal impulse, and better transmission amid tighter liquidity to name a few), the net cost of soft signalling could turn out to be higher than that of an outright front-loaded 50bps hike at this point, Emkay Global said. Liquidity tightness would lead to faster and better transmission, implying that the RBI may not get too restrictive and the terminal rate could hover near the estimated real rates, i.e., not more than 100bps hikes ahead. However, the situation globally is still fluid, and macro assessments might require frequent adjustments ahead from a policy perspective, Emkay Global added.
In a report, Morgan Stanley has also said the MPC is likely to increase the repo rate by 50bps, to 5.9 per cent, with an unchanged stance. On inflation, Morgan Stanley said it has been range-bound around the 6-7 per cent mark since January 2022 (barring April 2022). "We expect inflation to remain sticky around 7.1-7.4 per cent in September as well, driven by increases in food prices as per high frequency food price trend. Thereafter, we expect the trend to moderate but remain above 6 per cent until Jan/Feb-23," Morgan Stanley's report noted. According to the report, the inflation outlook is towards on the upside due to uncertainty around food inflation trajectory (sowing for rice, pulses is lower YoY), changes in global commodity prices and possibility of imported inflation if exchange rate weakens amid dollar strength.
Sonal Bandan, economist with Bank of Baroda
"In the upcoming credit policy of RBI which is scheduled on Sep 30, 2022, we expect MPC to raise repo rate by another 50bps. We expect rates to increase up till 6-6.25 per cent," said Sonal Bandan, economist with Bank of Baroda. In its recent report, Bank of Baroda said significant risks have emerged for growth and inflation forecasts.
"While risks to growth are driven by slowdown in global growth, risks to inflation are more domestic in nature. Deficient/untimely rain is estimated to have impacted output of rice and pulses," Bandan said. The other developments that RBI would consider are volatility in the currency and bonds market, Bandan said.In a report Emkay Global Financial Services said: "Clearly, central bankers globally are confronting the classic `trilemma` of international finance: one cannot have a stable currency, unfettered capital flows, and independent monetary policy all at the same time."
The Reserve Bank of India`s (RBI) Monetary Policy Committee (MPC) is expected to raise the policy rate ranging between 35 to 50 basis points (bps) on Friday, experts believe. The experts also point out that the rate revision by the US Federal Reserve and the central banks of many other countries have taken an aggressive stance on the rate revision.
The Reserve Bank's rate-setting panel on Wednesday started deliberations on the keenly awaited monetary policy amidst expectation of 50 basis points hike in interest rate to check inflation and improve foreign capital inflow to arrest declining value of rupee against the US dollar.
The decision of RBI Governor Shaktikanta Das headed six-member Monetary Policy Committee (MPC) will be announced on September 30 at 10 PM.
The decision of RBI Governor Shaktikanta Das headed six-member Monetary Policy Committee (MPC) will be announced on September 30. The government has tasked the central bank to ensure the consumer price index (CPI) remains at 4 per cent with a margin of 2 per cent on either side, but retail inflation has stubbornly stayed above the RBI's comfort zone since January.
Rating agency Icra expects the MPC to hike rates by 50 bps on Friday and turn data dependent thereafter, taking a cue from the latest CPI prints and the strength of the Q2 growth.
Dr. Sachchidanand Shukla, Chief Economist of the Mahindra Group
"The MPC will continue to front load its rate hikes and will likely raise the Repo rate by another 50 bps in its upcoming policy as:
Notwithstanding that Fed rate is now the highest since early 2008, the US Fed has hinted that it will continue to raise rates going forward, which will further tighten global financial conditions and impart strength to the USD.
India’s retail inflation rate has been above the RBI’s tolerance band for eight months now and is unlikely to come down before Q4 of FY23. Thus, it will remain above the tolerance band for three consecutive quarters, which will be deemed a failure to attain the inflation target. Moreover, the real policy rate remains in the negative territory.
The RBI may revise its FY23 growth forecast a tad lower from 7.2% but keep the inflation forecast unchanged."
Ramani Sastri - Chairman & MD, Sterling Developers Pvt. Ltd.
"The economy as a whole is performing well and all indices of growth are positive. The revival in market sentiment against the backdrop of accelerating economic activities makes this festive season more attractive. If another rate hike takes place, home loan interest rates may enter the red zone, leading to short-term turbulence on overall housing demand, especially when buyers are likely to invest in their dream homes during the ongoing festive season. The recent consecutive repo rate hikes have already added to buyers’ overall acquisition cost. The real estate sector has started seeing healthy recovery across key property markets, driven primarily by end-users and this needs to be fostered. Hence it would be ideal that the apex bank maintain status quo as this would boost demand in the overall economy. We remain positive and hope that the government continues to provide the required support that the industry requires."
Jyoti Prakash Gadia, Managing Director, Resurgent India
"The sticky inflation, consistently above the benchmark rate in the last three months ,alongwith non-abating food price rise will force RBI to have a hawkish view and a 50 basis point rise in repo rate is expected in the next policy review by RBI. The inflationary trends are expected to continue and we have the supply side constraints too, in addition to the rising prices and interest rates across the globe.The world economy is heading towards recession , which will adversely impact the growth prospects of India also and this may lead to a review of the growth projections by RBI too. With the RBI hands being virtually tied in the current interest rising regime,no surprises are expected from RBI at this stage and it shall work towards taming inflation.The onus shall lie on the Government to continue its efforts to boost investment with suitable fiscal measures and reforms,for ensuring a firm revival and growth trajectory. On the liquidity front, RBI may work towards Stop taking further steps of absorption of liquidity, given the curren upsurge in short term rates."
Suman Bannerjee, CIO, Hedonova
"I'm expecting a 25 bp base rate hike and the same on the repo rate. More importantly, I'll be looking out for comments on open market operations to buy the rupee. The primary challenge India faces now is high inflation and a weak currency. This hampers exports which basically causes a vicious cycle of a weaker currency."
After investing over Rs 51,200 crore in August, the pace of foreign investors buying Indian equities slowed in September as they invested only Rs 1,386 crore so far. However, in the last four trading sessions, FPIs have pulled out a little over Rs 9,750 crore from the Indian equity market amid strengthening of the US dollar.
A SBI research report said the Indian markets have, however, performed much better. Specifically, the rupee has been holding remarkably well with RBI intervention supporting it in the market.
"This is in sharp contrast to the 2013 taper tantrum crisis when the rupee witnessed significant volatility for a prolonged stretch of time. We believe that it might be better for RBI to allow the rupee to depreciate a bit, finding its natural balance," it said.
Even as the Dollar Index has surged by 17.1 per cent, since the Russia-Ukraine war broke out, the rupee has only depreciated by 7.8 per cent, indicating the RBI has been leaning against the wind in terms of managing the currency and it may pay off now with a little bit of leaning with the wind, though only to an extent, the report said.
Besides inflation, the RBI is also likely to come out with steps to shore up foreign capital inflows to check the declining value of the rupee against the US dollar. Forex reserves have declined by USD 86 billion to USD 546 billion (from their highs last year).
Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers expects the repo rates to see a further rise, as the government is trying to curb inflation levels.
"The current repo rates stand at 5.4 per cent with the rate hovering above pre-pandemic levels. Banks have begun raising loan interest levels as a result of higher repo rate," he said. However, the upcoming festive season will spur sales as the developers are expected to offer attractive deals to homebuyers and this could neutralise the impact of rising home loan rates to some extent, he added.
Assocham's Secretary General Deepak Sood
Industry body Assocham said hike in policy interest rates by the RBI in the range of 35-50 basis points seems unavoidable, given the tightening of rates by most of the central banks including the US Federal Reserve.
"While the industry would like to see lower interest rates, the main challenge and the priority is to tackle inflation head-on so that we have a sustainable growth," said chamber's Secretary General Deepak Sood.
He said the accommodative stance by the RBI supported by several fiscal measures by the government had certainly helped the economy in a multi-pronged manner.
The RBI, which has since May raised the repo rate by 140 basis points (bps), may yet again go for a 50-bps increase, which will take the key rate to a three-year high of 5.9 per cent, say experts. The present rate is 5.4 per cent.
As per the latest data, the inflation was at 7 per cent in August. While inflation remains high, the Indian rupee is sliding sharply, the US dollar and was currently trading near 82 against the greenback. The rupee depreciation has hastened following the US Fed raising their interest rate thrice by 75 basis point each in the recent past. Other major central banks too have become aggressive in raising rates.
The government has tasked the central bank to ensure the consumer price index (CPI) remains at 4 per cent with a margin of 2 per cent on either side, but retail inflation has stubbornly stayed above the RBI's comfort zone since January.
The decision of RBI Governor Shaktikanta Das headed six-member Monetary Policy Committee (MPC) will be announced on September 30.
The Reserve Bank's rate-setting panel on Wednesday started deliberations on the keenly awaited monetary policy amidst expectation of 50 basis points hike in interest rate to check inflation and improve foreign capital inflow to arrest declining value of rupee against the US dollar.
Aditi Nayar, Chief Economist, ICRA, too expects another 'new normal' 50 bps rate hike from the MPC in September 2022. "With inflation expected to soften in October 2022, the December policy decision is likely to be highly data dependent, she added.
SBI in a special report said a 50 basis points hike in repo rate "looks imminent". "We expect the peak repo rate in the cycle at 6.25 per cent. A final rate hike of 35 bps is expected in December policy," it said.
The RBI, which has since May raised the short-term lending rate (repo) by 140 basis points (bps), may again go for a 50-bps increase to take it to a three-year high of 5.9 per cent, say experts.
Dhruv Agarwala, Group CEO, Housing.Com
"Reining in inflation will remain the RBI's top concern amid resilient economic expansion and robust credit growth. Any hike in rates would result in banks increasing home loan interest rates, too. But, we are of the opinion that its impact would not be significant as demand for property remains robust. Demand is only going to accelerate further during this festive season."
Madan Sabnavis, Chief Economist at Bank of Baroda
"Inflation in India remains high at around 7 per cent and is unlikely to come down any time soon. This means that a rate hike is given. The quantum is what the market would be interested in. While a hike of 25-35 bps would have signaled that the RBI is confident that the worst of inflation is over, the recent developments in the forex market could prompt a higher quantum of 50 bps to stay on track with other markets so as to retain investor interest."
The RBI, which has since May raised the short-term lending rate (repo) by 140 basis points (bps), may again go for a 50-bps increase to take it to a three-year high of 5.9 per cent, say experts.
The Reserve Bank of India (RBI) may take cues from its global counterparts, including the US Federal Reserve, to raise interest rate for the fourth time in a row on Friday to tame stubborn inflation.
Property consultant Anarock Group chairman Anuj Puri
"With the inflationary pressures evident across the world, many countries have seen back-to-back interest rate hikes in the recent past. India is closely knit to the global economy and had to take remedial actions to control inflation, which is driven by domestic as well as global factors. A degree of discomfort notwithstanding, a 50-bps hike should not seriously hamper homebuyers' sentiments. Moreover, the festive season is around the corner. This is a period when developers usually roll out various freebies and offers, and we may even see fixed interest rate guarantee plans announced this year."
V Swaminathan, executive chairman, Andromeda Loans
"Given the increase in rates in other economies, the RBI has no choice but to increase rates. However, inflation in India is not as much of a problem and the quantum of increase should be moderated in this light. Home loan borrowers would be well advised to explore fixed-rate loans in this kind of environment."
Since May, the central bank has cumulatively raised the interest rate by 140 bps in its effort to contain inflation.
The government has tasked the RBI to ensure the retail inflation remains at 4 per cent, with a margin of 2 per cent on either side.
"In the upcoming credit policy of RBI, which is scheduled on 30 September 2022, we expect MPC to raise the repo rate by another 50 bps. We expect rates to increase up till 6-6.25 per cent," a report said.
The RBI's view on all issues will provide guidance to the market on repo rate, stance, growth and inflation projections, rupee, liquidity and global view.
In a report, Bank of Baroda said the monetary policy this time will be more closely watched, given the recent developments in the forex market following the Fed raising rates last week.
The central banks of the UK and the EU have also gone for rate hikes to tame inflation.
The US Fed delivered the third consecutive rate hike after it raised the rates by 75 bps to take the target range to 3-3.25 per cent.
The consumer price index (CPI) based on retail inflation, which had started showing signs of moderation in May, has again firmed up to 7 per cent in August. The RBI takes into account retail inflation while framing its bi-monthly monetary policy.
The RBI, which has since May raised the repo rate by 140 basis points (bps), may yet again go for a 50-bps increase, which will take the key rate to a three-year high of 5.9 per cent, say experts. The present rate is 5.4 per cent.
The MPC, headed by RBI Governor Shaktikanta Das, is meeting on September 28-30. The decision will be announced on Friday (September 30).
Based on the recommendations of the Monetary Policy Committee (MPC), the RBI had effected 50 basis points increase in repo rate each in June and August after raising the short-term lending rate by 40 basis points in an off-cycle decision in May.
Expectations are of yet another rate hike of 50 basis points to check high inflation, in line with similar actions taken by other major central banks, including the US Fed.
RBI Monetary Policy Review MPC Meeting: The Reserve Bank's rate-setting panel started its 3-day deliberations on Wednesday.
RBI Monetary Policy Review MPC Meeting: Date and Time
-The MPC, headed by RBI Governor Shaktikanta Das, is meeting on September 28-30.
- The RBI will announce the outcome on 30th September at 10 AM.
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