RBI MPC Meeting HIGHLIGHTS: No respite on home loan EMIs yet as RBI keeps rate paused; Shaktikanta Das says inflation fight not over

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RBI MPC Meeting LIVE | Bank of Baroda's Madan Sabnavis says June monetary policy more or less along expected lines 

Madan Sabnavis, Chief Economist at Bank of Baroda, says: "While GDP growth will be 6.5 per cent for the year, there will be a tendency for the growth rate to keep declining progressively across the quarters... Inflation will be 5.1 per cent though will be lower at 4.6 per cent in Q1. Subsequently, it will be increasing progressively in the next two quarters. This indicates that it is unlikely that there will be a rate cut until Q4."

Sabnavis points out that the RBI has been clear that the decision taken is for this quarter only and future action will be data-driven. "Hence, this should not be taken as being close to a change in stance. We expect bond yields to be stable, especially at the longer end," he adds. 

RBI MPC Meeting LIVE | Central bank successfully delivered a hawkish pause, says HDFC Bank's Abheek Barua

Abheek Barua, Chief Economist at HDFC Bank, says the RBI's decision to keep its stance at “withdrawal of accommodation” is justified given the still looming inflationary risks. "We expect that growth could be lower at six per cent this fiscal year while there are upside risks to the RBI’s inflation forecast, especially given the impending risks around oil prices and the performance of monsoons," he says. 

"Going forward, the RBI could go for a 'higher for longer' narrative, staying on an extended pause in FY24 while tightening liquidity conditions. Therefore, short-term rates could remain under pressure over the coming months. For the 10-year yield, we could see some pressure return once the government's borrowing program kicks in and a range of 7.2-7.3 per cent is likely in the first quarter," Barua adds. 

RBI MPC Meeting LIVE | Respite for home loan customers only possible if and when repo rate comes down, says Anuj Puri

A respite for home loan customers, in the form of lower EMIs, can only come about if and when the repo rate comes down and banks reduce their interest rates, Anuj Puri, Chairman of property consultant ANAROCK Group, tells Zeebiz.com. 

"Alternately, interest rates can come down if banks announce promotional lending rates to fuel interest, as was seen during the first phase of the pandemic," he adds.

Image: Reuters

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RBI MPC Meeting LIVE | Next move more likely to be a cut than a hike, says Trust MF's Sandeep Bagla 

Sandeep Bagla, CEO of Trust Mutual Funds, says growth remains resilient and inflation, although moderating now, could rise in the future as labour market remains tight and the wage-inflation spiral remains a distinct danger. 

"Australia and Canada have raised rates after a pause. We are not out of the woods yet. Liquidity surplus will have to be reduced as Rs 2,000 notes seep into the liquidity in the banking system. It is quite possible that market yields rise by a few basis points as the RBI waits for more economic cues amidst continued global contradictory cues on inflation and growth fronts," he says. 

Rate-sensitive stocks a mixed bag on Dalal Street after RBI's pause

Rate-sensitive stocks — or stocks from spaces sensitive to changes in interest rates — stage mixed moves after the RBI's status quo on the benchmark interest rate as well as the policy stance, which is in line with market expectations.

BFSI shares

Auto 

 Real estate

Consumer durables

Read more on rate-sensitive stocks

Ajay Bagga says first reduction in repo rate may come around October-November

The market expert highlights that the RBI has clearly mentioned that its fight against inflation is not over.

The RBI aims to bring inflation at four per cent over the medium term. The RBI Governor said that just because inflation is within the target range (+/-2 per cent), one should not consider that it is under control. The target is four per cent, Shaktikanta Das reiterated.  

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RBI MPC Meeting LIVE | Monetary policy action delivering desired results

RBI MPC Meeting LIVE | Central bank to remain nimble in managing liquidity, says Shaktikanta Das

The RBI will be ensuring adequate resources for the productive requirements of the economy, he says. 

RBI MPC Meeting LIVE | Shaktikanta Das says CAD expected to moderate further in Q4, remains eminently manageable 

RBI MPC Meeting LIVE | Rupee has remained stable since January, says Shaktikanta Das

The RBI chief says that the external sector remains resilient for India, as reflected in the current account deficit, external debt and the international investment position.

RBI MPC Meeting LIVE | RBI committed to ensuring sufficient liquidity in system, says Shaktikanta Das

RBI MPC Meeting LIVE | Decision on repo rate, policy in line with economists' estimates

RBI MPC Meeting LIVE | Consumer inflation pegged at 5.1% in 2023-24 vs 5.2% previously 

RBI MPC Meeting LIVE | Central bank's rate-deciding panel decides to lower consumer inflation target for 2023-24

Image: Reuters