RBI MPC Meeting HIGHLIGHTS: MPC decides unanimously to keep repo rate on hold; Shaktikanta Das says high inflation a major risk to macro stability

Thank you! That's all today on Zeebiz.com's blog on the RBI's October monetary policy review

For all other news related to business, politics, tech, sports and auto, follow us on Twitter, Facebook, LinkedIn and Instagram. 

RBI MPC meeting LIVE | Gold loan limit enhanced for urban cooperative banks

The RBI raised a limit applicable to gold loans for urban cooperative banks (UCBs) on October 6, in a bid to incentivise them to meet their prescribed priority sector lending targets. The limit on loans against gold and gold jewellery now stands at Rs 4 lakh, up from the earlier Rs 2 lakh.

“It has been decided to increase the existing limit for Gold Loans under the Bullet Repayment scheme from Rs 2 lakh to Rs 4 lakh in respect of Urban Co-operative Banks (UCBs) who have met the overall target and sub-targets under the Priority Sector Lending (PSL) as of March 31, 2023. This measure is in pursuance of our earlier announcement that suitable incentives shall be provided to UCBs that have met the prescribed PSL targets as of March 31, 2023,” the RBI chief says. Read more here

Image: Reuters

RBI MPC meeting LIVE | RBI to harmonise internal ombudsman framework 

In a bid to strengthen the customer grievance redressal system, RBI Governor Shaktikanta Das says the central bank decided to effect certain changes, and both consolidate and harmonise the internal ombudsman guidelines into a single master direction. The RBI chief mentions that this will further strengthen the customer grievance redressal system of the regulated entities.

The RBI introduced the mechanism in select scheduled commercial banks in 2015. Read more here

RBI MPC meeting LIVE | RBI remains very careful, but a surprise shot can emerge at any point, says Equirus Capital's Anitha Rangan 

"While batting defensively on a turning pitch, the RBI remains very careful... However, on a turning pitch, a surprise shot can emerge at any point,” says Anitha Rangan, Economist, Equirus Capital

"The high inflation risk is emanating from volatile food and energy prices both domestically and globally, driven by geo-political factors and climate changes. While headline inflation is expected to moderate in the near term, the RBI did cite that outlook uncertainty on food inflation comes from lower reservoir levels, lower sowing, and volatile global food and energy prices. The positive driver is that core inflation is softening and is critical for keeping the headline inflation lower," Rangan adds. 

Read more on what experts say about RBI's October policy review

RBI MPC meeting LIVE | Not really surprised, says Bank of Baroda's Madan Sabnavis 

"Not really," says Bank of Baroda Chief Economist Madan Sabnavis, asked if any of the policy announcements left him surprised. 

 "The RBI went by the expected script. But indication seems to be not to expect any rate cut this year," Sabnavis tells Zeebiz.com. 

RBI MPC meeting LIVE | Here what Shaktikanta Das says on the country's banking system

RBI Governor Shaktikanta Das says that elevated levels of MSF borrowings amidst substantial funds parked under the standing deposit facility (SDF) are symptomatic of skewed liquidity distribution in banks. He also says that it was reflected in the firming up of the weighted average call rate (WACR)—the operating target of monetary policy.

Despite such hardening at the short-end of the term structure, the average term spread in the G-Secs market (10-year minus 91-day Treasury Bills) remained at around 40 basis points in August-September suggesting stable financial conditions, the RBI chief adds. Read more here

RBI MPC meeting LIVE | Equities may have to compete with bonds in the short run, says SAMCO MF's Umesh Kumar Mehta 

Equities may have to compete with bonds in the short run, says Umesh Kumar Mehta, Chief Investment Officer at SAMCO Mutual Fund. "It is indeed a turning pitch as far as inflation is concerned for the RBI but on the other side, global market forces are scaring all the central bankers on higher bond yields, which are getting stronger by the day. The current pause wouldn’t last long, for that matter, for any central bank," he says. 

"The rates are likely to move higher before the actual pivot happens sometime in the middle of the next year. So, Equities will have serious competition from bonds going forward."

Read more on what experts say about RBI's October policy review

RBI MPC meeting LIVE | Economists not surprised by RBI's latest policy action 

"Unsurprisingly, the RBI’s MPC decided to keep its policy rate unchanged and retain its stance at ‘withdrawal of accommodation’," says Prasenjit Basu, Chief Economist, ICICI Securities. 

"The key change is a much more benign inflation forecast... We continue to expect the next policy move to be a rate cut in Q1FY25," he says. 

Read more on what experts make of the RBI policy

RBI MPC meeting LIVE | Central bank mentions 'evenly balanced risks' as it maintains its GDP, CPI inflation forecasts for FY24 

Here's how the RBI projects GDP and headline inflation in the country, as per the October 6 policy statement:

• Consumer inflation at 5.4 per cent in 2023-24
  • 6.4 per cent in Q2
  • 5.6 per cent in Q3 
  • 5.2 per cent in Q4 
  • 5.2 per cent in the first quarter of 2024-25
• Real GDP growth at 6.5 per cent in 2023-24
  • 6.5 per cent in Q2
  • 6.0 per cent in Q3
  • 5.7 per cent in Q4

Source: RBI monetary policy statement

RBI MPC meeting LIVE | South-west monsoon rainfall recovered in September, says RBI

The south-west monsoon finished six per cent below the long-period average (LPA), the central bank points out. 

Here are some of the key points highlighted by the RBI in today’s policy statement: 

• Acreage under kharif crops up 0.2% vs last year
• Industrial production (commonly known as factory output) up 5.7% in July
• Core industry output up 12.1% in August
• Services PMIs, and other high frequency indicators indicated healthy expansion in August-September

RBI MPC meeting LIVE | Retail inflation expected to have cooled down further in September after partly easing in previous month, says RBI Governor 

RBI Governor Shaktikanta Das says that headline inflation corrected partly in August and is expected to have eased further in September on the back of a moderation in prices, following a surge in July driven by the rates of tomatoes and other vegetables. "A silver lining amidst all these is declining core inflation (CPI minus food and fuel)," the RBI chief says.

“The overall inflation outlook, however, is clouded by uncertainties from the fall in kharif sowing for key crops like pulses and oilseeds, low reservoir levels, and volatile global food and energy prices,” he adds.

Image: RBI webcast

RBI MPC meeting LIVE | Rate-sensitive stocks hold on to the green after RBI maintains status quo

Here's how some of the major stocks in the rate-sensitive baskets (explained earlier on this blog) fare at this hour after the RBI policy matches economists' expectations:

Auto

Financial services

Real estate

Consumer durables  

Read more on rate-sensitive stocks here

Meanwhile, benchmark indices Sensex and Nifty add on to their initial gains amid strong buying interest across sectors, with financial, IT, FMCG and auto shares being the biggest movers. The Nifty50 is up 106.1 points, or 0.54 per cent, at 19,651.85, and the leaner, 30-scrip gauge at 65,971.25, up 339.68 points, or 0.52 per cent. 

Catch minute-by-minute updates on Dalal Street, and what experts recommend to make the most of your investment portfolio, only on the Zee Business market here.

RBI MPC meeting LIVE | BREAKING — RBI pegs GDP growth at 6.6% in first quarter of 2024-25 

RBI MPC meeting LIVE | MPC votes 5-1 to maintain policy stance at 'withdrawal of accommodation'

RBI MPC meeting LIVE | BREAKING — Shaktikanta Das says excessive liquidity can hurt price and financial stability