RBI MPC Meeting HIGHLIGHTS: Shaktikanta Das-led MPC keeps repo rate, GDP projection on hold, tweaks inflation forecasts
RBI MPC Meeting HIGHLIGHTS: RBI Governor Shaktikanta Das-led Monetary Policy Committee (MPC) decided unanimously to keep the repo rate — or the key interest rate at which the central bank lends money to commercial banks — on hold at the existing 6.5 per cent at the end of its bi-monthly review on August 10, a move in line with economists' expectations. The RBI Governor said the central bank remains focused on its "withdrawal of accommodation" policy stance, as he announced the MPC's decision to maintain its GDP growth projection for the year ending March 2024 at 6.5 per cent, citing "evenly-balanced" risks.
Das said that India has made good progress in sustaining its growth momentum, and inflation has moderated but the job on brining consumer prices under control is not done. Read the full text of RBI Governor Shaktikanta Das's speech
The RBI, however, tweaked its consumer inflation forecasts for the coming quarters, taking its overall projection for the financial year to 5.4 per cent from 5.1 per cent.
The latest review comes at a time when central banks around the globe continue to struggle against sticky inflation without disrupting the pace of growth.
Catch highlights of the RBI's August policy review, and much more, only on Zeebiz.com's blog:
RBI MPC Meeting HIGHLIGHTS: RBI Governor Shaktikanta Das-led Monetary Policy Committee (MPC) decided unanimously to keep the repo rate — or the key interest rate at which the central bank lends money to commercial banks — on hold at the existing 6.5 per cent at the end of its bi-monthly review on August 10, a move in line with economists' expectations. The RBI Governor said the central bank remains focused on its "withdrawal of accommodation" policy stance, as he announced the MPC's decision to maintain its GDP growth projection for the year ending March 2024 at 6.5 per cent, citing "evenly-balanced" risks.
Das said that India has made good progress in sustaining its growth momentum, and inflation has moderated but the job on brining consumer prices under control is not done. Read the full text of RBI Governor Shaktikanta Das's speech
The RBI, however, tweaked its consumer inflation forecasts for the coming quarters, taking its overall projection for the financial year to 5.4 per cent from 5.1 per cent.
The latest review comes at a time when central banks around the globe continue to struggle against sticky inflation without disrupting the pace of growth.
Catch highlights of the RBI's August policy review, and much more, only on Zeebiz.com's blog:
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For all other news related to business, politics, tech, sports and auto, follow us on Twitter, Facebook, LinkedIn and Instagram.
RBI raises per transaction limit for UPI Lite by 2.5 times to Rs 500
The RBI proposes to increase the per transaction payment limit to Rs 500 for UPI Lite in offline mode. Currently, limits of Rs 200 per transaction and an overall Rs 2,000 per payment instrument have been prescribed by the RBI for small value digital payments in offline mode.
RBI MPC Meeting LIVE | Change in RBI's inflation outlook quite significant, says Bank of Baroda's Madan Sabnavis
Madan Sabnavis, Chief Economist at Bank of Baroda, points out that while the RBI has expectedly not changed the repo rate or stance, there has been a change in its inflation outlook quite significantly. "Interestingly, the RBI has increased the forecast to 5.4 per cent from 5.1 per cent with the reading for the second quarter inflation seen crossing the six per cent mark. "This is indicative that for the present calendar year, there is no probability of a rate cut... The introduction of an incremental CRR, though on a temporary basis, will impound resources of banks and have an upward impact on market rates. While there will still be surpluses in the market, the concept of impounding of resources will exert upward pressure on sentiment and hence interest rates," he says.
"We can assume that this will be reversed before the festival/busy season as the RBI could have gone in for OMO to permanently take out liquidity from the system.”
Rate-sensitive stocks continue to stage mixed moves after RBI announcements
Banking and NBFC
| Stock | CMP (in rupees/share) | Change (%) |
| LICHSGFIN | 433.1 | 0.53 |
| SBIN | 575.7 | 0.34 |
| SBILIFE | 1,350.00 | 0.05 |
| SHRIRAMFIN | 1,848.95 | 0 |
| BAJAJFINSV | 1,516.00 | -0.04 |
| BAJFINANCE | 7,115.00 | -0.15 |
| MUTHOOTFIN | 1,360.00 | -0.19 |
| AXISBANK | 946.3 | -0.39 |
| HDFCBANK | 1,642.00 | -0.51 |
| PFC | 268.6 | -0.54 |
| SBICARD | 865.75 | -0.63 |
| HDFCLIFE | 640.6 | -0.81 |
| KOTAKBANK | 1,814.85 | -0.91 |
| ICICIBANK | 963.8 | -0.91 |
| CHOLAFIN | 1,044.05 | -1.1 |
Auto
| Stock | CMP (in rupees/share) | Change (%) |
| M&M | 1,549.75 | 0.98 |
| TVSMOTOR | 1,349.50 | 0.71 |
| ASHOKLEY | 188.8 | 0.67 |
| BALKRISIND | 2,364.00 | 0.38 |
| MRF | 1,06,074.50 | -0.32 |
| BAJAJ-AUTO | 4,651.35 | -0.33 |
| EICHERMOT | 3,398.55 | -0.41 |
| HEROMOTOCO | 3,038.45 | -0.69 |
| MARUTI | 9,389.05 | -0.78 |
| TATAMOTORS | 614.5 | -1.29 |
Real estate
| Stock | CMP (in rupees/share) | Change (%) |
| BRIGADE | 574.2 | 1.46 |
| PHOENIXLTD | 1,705.85 | 1.23 |
| SOBHA | 584.5 | 0.64 |
| MAHLIFE | 517.1 | 0.44 |
| DLF | 485.85 | 0.03 |
| IBREALEST | 67.15 | 0 |
| GODREJPROP | 1,521.00 | -0.38 |
| OBEROIRLTY | 1,083.05 | -0.55 |
| LODHA | 702 | -1.2 |
| PRESTIGE | 565 | -3.65 |
Consumer goods
| Stock | CMP (in rupees/share) | Change (%) |
| RELAXO | 942.4 | 1.88 |
| AMBER | 2,532.30 | 1.58 |
| BLUESTARCO | 752 | 0.88 |
| CROMPTON | 307.9 | 0.7 |
| WHIRLPOOL | 1,503.35 | 0.16 |
| VOLTAS | 849.6 | 0.02 |
| TTKPRESTIG | 784.2 | -0.44 |
| HAVELLS | 1,303.00 | -0.69 |
| RAJESHEXPO | 520 | -0.84 |
| ORIENTELEC | 238 | -0.85 |
| TITAN | 2,928.50 | -0.93 |
| KAJARIACER | 1,444.10 | -0.95 |
| VGUARD | 309.75 | -1.78 |
| DIXON | 4,800.00 | -2.07 |
| BATAINDIA | 1,662.90 | -2.2 |
RBI MPC Meeting LIVE | Shaktikanta Das says India’s overall strong macro fundamentals have laid foundations for sustainable growth
Here are some of the key things he points out about the domestic and global economies:
- Indian economy exuding enhanced strength & stability despite massive shocks to global economy in recent years
- Our economy has continued to grow at a reasonable pace
- India uniquely placed to benefit from ongoing transformational shifts in global economy in the wake of geopolitical realignments & technological innovations
- Global economy continues to face daunting challenges of
- elevated inflation
- high levels of debt
- tight and volatile financial conditions
- continuing geopolitical tensions
- fragmentations
- extreme weather conditions
- Global growth likely to remain low by historical standards this year and for next few years
- External factors likely to impinge on growth prospects of most major advanced & emerging economies
- India expected to withstand these external headwinds far better than many other countries
- Overall economic activity momentum in India remains positive
- Aggregate demand conditions remain buoyant
- elevated inflation
- high levels of debt
- tight and volatile financial conditions
- continuing geopolitical tensions
- fragmentations
- extreme weather conditions
RBI Policy LIVE Updates | India has made good progress in sustaining growth momentum, inflation has moderated but job still not done, says Shaktikanta Das
"Inflationary risks persist amidst volatile international food and energy prices, lingering geopolitical tensions and weather-related uncertainties," says RBI Governor Shaktikanta Das.
He reiterated that the central bank remains committed to aligning consumer inflation to its four per cent target "on a durable basis".
RBI Governor announces temporary measure to absorb surplus liquidity in system
With effect from Aug 12, scheduled banks will maintain an incremental cash reserve ratio (I-CRR) of 10 per cent on the increase in their net demand and time liabilities (NDTL) between May 19 and July 28, a measure intended to absorb surplus liquidity in the system, he says.
Das also mentions that the key factors behind the excessive liquidity include the return of Rs 2,000 notes to banking system. "This is purely a temporary measure for managing the liquidity overhang," he says.
The existing cash reserve ratio (CRR) remains unchanged at 4.5 per cent, he reiterates.
RBI Monetary Policy LIVE | Assessing the future trajectory of inflation is a continuous process, says Shaktikanta Das
"We have a choice to modify our inflation projections in every meeting of MPC, if warranted, in the interest of better guidance; or avoid frequent changes and revise them only on fewer occasions for simplicity of presentation," says the RBI Governor.
RBI MPC Meeting LIVE | Shaktikanta Das says vegetable prices may see a significant correction in a few months
Here are some of the highlights of what the RBI Governor said on vegetable prices and food inflation:
- Prospects of kharif crops have brightened thanks to monsoon progress (planting activity in the kharif season takes place from June to September in India; harvest begins around October)
- Uncertainties remain on domestic food price outlook due to sudden weather events, possible El Nioo conditions from August
- Global food prices exhibiting a hardening bias on renewed geopolitical tensions
RBI Policy | Shaktikanta Das says Rupee has remained stable since January 2023
The RBI Governor highlights that the country's forex reserves have crossed the $600 billion level.
RBI Monetary Policy LIVE | Surplus liquidity has risen in system due to withdrawal of Rs 2,000 banknotes, dividend to government, says Shaktikanta Das
RBI Policy | Domestic financial sector has been stable and resilient, says Shaktikanta Das
This is being reflected in the economy's sustained growth numbers, the RBI Governor adds.
RBI Policy | Cash reserve ratio (CRR) remains unchanged at 4.5%
The cash reserve ratio is the proportion of a commercial bank's total deposits that it is required to maintain as liquid cash.
RBI Policy LIVE Updates | Shaktikanta Das says core inflation has softened by over 100 bps from recent peak
RBI Governor Shaktikanta Das says that inflation excluding food and fuel — also known as core inflation — has eased by more than 100 basis points from its peak in January 2023.
RBI tweaks inflation forecasts
The Monetary Policy Committee now pegs inflation at 6.2 per cent in Q2, instead of 5.2 per cent, and at 5.7 per cent in Q3, instead of 5.4 per cent earlier.