RBI MPC Meeting Highlights: BIG SURPRISE! MPC decides unanimously to keep repo rate unchanged; Shaktikanta Das says war against inflation continues
RBI MPC meeting April 2023: Reserve Bank of India (RBI) Governor Shaktikanta Das-led Monetary Policy Committee — the central bank's all-powerful panel that decides the benchmark interest rates in the country — on April 6 announced a surprise status quo on the repo rate, leading to an intraday recovery on Dalal Street. Repo rate is the benchmark rate of interest at which the RBI lends money to commercial banks — this is the very rate that determines the EMI you pay for any of your loans. The RBI governor said the "war against inflation will continue", reiterating the MPC's commitment to bringing down inflation within two per cent of its medium-term target of four per cent.
Shaktikanta Das, however, hinted at the possibility of more hikes ahead should the need arise. Most economists welcomed the RBI announcements though with a warning that sticky consumer inflation might prompt the central bank to once again take to the tightening of monetary policy.
The meeting — the second bi-monthly review of monetary policy in 2023 — comes at a time when central banks continue to tame red-hot inflation trying not to damage the pace of economic growth, with some fearing of at least a mild recession.
Catch LIVE share market updates
Follow this space to know all about the RBI MPC's second bi-monthly review of 2023, minute-by-minute updates on key decisions, the views of Zee Business Managing Editor Anil Singhvi and other experts, realtime analysis and much more, only on Zeebiz.com's LIVE blog:
RBI MPC meeting April 2023: Reserve Bank of India (RBI) Governor Shaktikanta Das-led Monetary Policy Committee — the central bank's all-powerful panel that decides the benchmark interest rates in the country — on April 6 announced a surprise status quo on the repo rate, leading to an intraday recovery on Dalal Street. Repo rate is the benchmark rate of interest at which the RBI lends money to commercial banks — this is the very rate that determines the EMI you pay for any of your loans. The RBI governor said the "war against inflation will continue", reiterating the MPC's commitment to bringing down inflation within two per cent of its medium-term target of four per cent.
Shaktikanta Das, however, hinted at the possibility of more hikes ahead should the need arise. Most economists welcomed the RBI announcements though with a warning that sticky consumer inflation might prompt the central bank to once again take to the tightening of monetary policy.
The meeting — the second bi-monthly review of monetary policy in 2023 — comes at a time when central banks continue to tame red-hot inflation trying not to damage the pace of economic growth, with some fearing of at least a mild recession.
Catch LIVE share market updates
Follow this space to know all about the RBI MPC's second bi-monthly review of 2023, minute-by-minute updates on key decisions, the views of Zee Business Managing Editor Anil Singhvi and other experts, realtime analysis and much more, only on Zeebiz.com's LIVE blog:
Latest Updates
Thank you! That's all today on Zeebiz.com's RBI MPC April 2023 review blog
For all other news related to business, politics, tech, sports and auto, follow us on Twitter, Facebook, LinkedIn and Instagram.
A pleasant surprise: SBI Chairman Dinesh Khara on latest RBI policy action
Describing the RBI's decision to pause the rates for now as "a pleasant surprise, given the market talks of one more final rate hike," SBI Chairman Dinesh Khara says: "With uncertainty looming large, this decision was perfectly timed."
"Simultaneously, the bouquet of regulatory initiatives like linking UPI to credit and developing the onshore market will spur innovations in product offerings. The decision to enable tracing unclaimed deposits and strengthening of grievance redressal are customer-centric. Overall, the RBI’s April policy guides the market in terms of expectations alignment," he adds.
RBI MPC Resolution April 2023 | Repo rate pause a welcome decision, may put to rest anxiety among borrowers, says LIC Housing Finance CEO
LIC Housing Finance CEO Y Viswanatha Gowd points out that today's move sends a positive signal to borrowers and will likely improve the sentiment.
"We expect the real estate along with other sectors to build up on this as it has come at the beginning of the new financial year. The prospective homebuyers will now be encouraged to crystallise their buying decision," he says.
RBI April 2023 Policy Review | WATCH Shaktikanta Das announce a pause in repo rate after six back-to-back increases since May 2022
RBI Policy | All members voted unanimously to keep repo rate at existing level
All members of the MPC voted in favour of the status quo, announced earlier in the day:
- Shashanka Bhide
- Ashima Goyal
- Jayanth R Varma
- Rajiv Ranjan
- Michael Debabrata Patra
- Shaktikanta Das
However, the MPC dissented on the decision to maintain the "withdrawal of accommodation" stance — a switch it made from "accommodative" in May 2022:
| For | Against |
| Ashima Goyal | Jayanth R Varma |
| Rajiv Ranjan | |
| Michael Debabrata | |
| Shaktikanta Das | |
| Shashanka Bhide |
Minutes of the April 3-6 meeting, due for release on April 20, 2023, will reveal what really made Jayanth R Varma express reservations on this resolution.
RBI Policy LIVE | Domestic economic activity remained resilient in January-March 2023
The RBI expects the production of food grain in the rabi season to increase 6.2 per cent in 2022-23.
Here are some other key things pointed out by the RBI:
- Among services, air passenger traffic, port freight traffic, e-way GST bills, toll collections saw healthy growth in Q4
- Railway freight traffic registered modest growth
- PMI pointed towards sustained expansion in manufacturing as well as services in March
RBI LIVE | Central bank says global economic activity remains resilient despite sticky inflation, acknowledges turmoil in banking system in some advanced economies
Here are some highlights:
- RBI also mentions tight financial conditions in global economy, lingering geopolitical hostilities
- Sovereign bond yields fell steeply in March on safe-haven demand, reversing sharp increase in February
- Equity markets have declined since last MPC meeting, US dollar has pared its gains
- Weakening external demand, spillovers from the banking crisis in some advanced economies, volatile capital flows, debt distress in certain vulnerable economies weigh on growth prospects
'Enough might just be enough' overarching message from RBI: Nomura India Economist Aurodeep Nandi
“Enough (tightening) might just be enough was the overarching message from the RBI in the April meeting," says Aurodeep Nandi, India Economist and Vice President, Nomura.
"We were out of consensus in forecasting that the RBI would pause and keep stance at ‘withdrawal of accommodation’ – which is exactly what was delivered. In our view, this reflects a forward looking monetary policy that takes into cognizance elevated global growth risks, under-control inflation trajectory, and the need to wait and watch and assess the impact of the sharp policy tightening already delivered," he says.
"However, the RBI has kept the door open to further action if macro conditions change, also in line with our expectations. We maintain our view of a policy pause hereon and 75bp of rate cuts, starting from October," he adds.
RBI Policy LIVE | Consumer inflation estimated at 5.2% in 2023-24
The RBI pegs retail inflation — gauged by the consumer price index — at 5.1 per cent in the quarter ending June 2023, 5.4 per cent each in the next two quarters, and 5.2 per cent in the January-March 2024 period.
The RBI cites evenly balanced risks, once again, giving the rationale behind its projections, assuming the average crude oil price at $85 a barrel and a normal monsoon.
RBI LIVE | MPC pegs GDP growth at 6.5% in 2023-24
Here's a look at its latest projections:
- July-September 2023: 6.2 per cent
- October-December 2023: 6.1 per cent
- January-March 2024: 5.9 per cent
In its February 2023 review, the RBI had projected GDP growth at 7.8 per cent in the quarter ending June 2023.
RBI Policy LIVE | Financial stability concerns appear to have pre-empted the pause in repo rate, says Aditi Nayar
The MPC assesses the impact of its cumulative increases of 250 bps in the repo rate in the current cycle, says Aditi Nayar, Chief Economist, Head-Research and Outreach at ICRA.
"If inflation does not fall in line with the MPC's assessment for Q1 FY2024, another hike could be in the offing, especially if the financial stability situation stabilises," she says.
RBI LIVE | Shaktikanta Das signals that more hikes not ruled out
RBI Governor Shaktikanta Das's announcement of no change in the ley interest rate for now sends the stock market leaping strongly to the green. However, the RBI chief also says that today's pause should be considered the outcome of the April review only, hinting that the central bank may be open to considering more increases going forward.
RBI LIVE | Shaktikanta Das says core inflation remains at elevated levels
"Our job is not over... The war against inflation has to continue until we see a durable decline in inflation closer to the target," the RBI Governor says.
He reiterates the central bank's commitment to taming inflation to bringing it within two per cent of its medium target of four per cent.
RBI LIVE | Shaktikanta Das says core inflation remains at elevated levels
"Our job is not over... The war against inflation has to continue until we see a durable decline in inflation closer to the target," the RBI Governor says.
He reiterates the central bank's commitment to taming inflation to bringing it within two per cent of its medium target of four per cent.
RBI LIVE | Shaktikanta Das says consumer inflation estimated to ease in 2023-24
The RBI estimates GDP growth to be at 6.5 per cent in the year ending March 2024, the RBI governor says.