In its 5th bi-monthly monetary policy statement for 2019-20, the Monetary Policy Committee (MPC), led by RBI Governor Shaktikanta Das, decided to keep the policy repo rate unchanged at 5.15%. The MPC has also slashed GDP growth forecast to 5% from 6.1%. The committee maintained its accommodative stance. The status quo was voted unanimously by all the MPC members. That's all for today readers. Thank you for tuning in. For more latest news visit www.deccenherald.com.
Hello readers, the Reserve Bank of India is widely expected to cut the key policy repo rate by at least 25 basis points on Friday, overlooking inflation concerns as the economic growth has been declining at a faster rate and industry, which includes manufacturing, is closer to slipping into recession. Stay tuned for live updates.
Let the 125 bps rate cut impact play out, says RBI governor Shaktikanta Das.
So far good coordination between fiscal and monetary authorities, says governor Das.
Steep telecom tariff hike can have some impact on core inflation: Das.
RBI satisfied with pace of monetary transmission
Food inflation expected to remain very high in January-March
At this juncture, it is better to wait and take a temporary pause: Das.
At this juncture, it is better to wait and take a temporary pause: Das
On growth prospects, Das states, 'We have some green shoots, things are improving.'
Das says inflation moderation is dependent on several factors.
RBI says it will launch a new type of prepaid payments instrument (PPI) that can be used only for the purchase of goods and services up to a limit of Rs 10,000.
There is a need to optimise the actions on rate reductions, says Shaktikanta Das.
The Reserve Bank will facilitate the setting up of a self-regulatory body (SRB) as a first step towards the development of the secondary market for corporate loans, says RBI Governor
Forex reserves jump to a new high of $451.7 billion: RBI Governor
Domestic demand has slowed down, which is being reflected in the softening of inflation excluding food and fuel, says Das.
On transmission, the MPC states that s against the cumulative reduction in the policy repo rate by 135 bps during February-October 2019, transmission to various money and corporate debt market segments ranged from 137 bps to 218 bps.
Data on corporate finance and on projects sanctioned by banks and financial institutions suggest some early signs of recovery in investment activity, though its sustainability needs to be watched closely: RBI
Non-oil export growth turned to positive territory, says RBI governor Shaktikanta Das.
Shaktikanta Das says that service sector activity generally remained weak in October.
Inflation likely to moderate below target by the second half of FY 2020-21.
RBI revises retail inflation projection upwards to 5.1-4.7 pc for the second half of this fiscal.
Rupee slips 8 paise to 71.61 against USD after RBI leaves policy rate unchanged.
RBI governor Shaktikanta Das makes a remark on the MPC decision. Says 'it has to be something different, right?'
Monetary transmission has been full and reasonably swift across various money market segments and the private corporate bond market.
All members of the MPC voted in favour of the decision.
The MPC recognises that there is monetary policy space for future action. However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture.
The MPC notes that economic activity has weakened further and the output gap remains negative. However, several measures already initiated by the Government and the monetary easing undertaken are gradually expected to further feed into the real economy.
RBI said that the forthcoming union budget will provide better insight into further measures to be undertaken by the government and their impact on growth.
Benchmark Indices turn negative after RBI's decision to keeps repo rate unchanged
Real GDP growth for 2019-20 is revised downwards from 6.1% in the October policy to 5%.
The CPI inflation projection is revised upwards to 5.1-4.7% for H2:2019-20 and 4.0-3.8% for H1:2020-21.
RBI decides to continue with the accommodative stance as long as it is necessary to revive growth.
MPC: Repo rate unchanged at 5.15%
The RBI is likely to revise the CPI inflation upwards for the year as well for the first quarter of the next year.
Ahead of policy decision, IT, metal and pharma stocks under pressure.
Nifty bank index up 81.55 points or 0.26% ahead of MPC.
Benchmark indices hold on their gains; The Sensex is up 103.70 points at 40953.99, and the Nifty up 23.70 points at 12066.90.
If MPC cuts rates, analysts expect this could be the last repo rate cut in this financial year.
If the RBI’s MPC reduces the repo rate today, it will be the sixth consecutive rate cut this year.
RBI may also revise GDP forecast for FY20, FY21.
The S&P BSE Sensex was up 80 points, or 0.2%, at 40,930 levels; Nifty50 index gained 22 points, or 0.2% ahead of RBI policy decision
In under a year, Reserve Bank of India (RBI) governor Shaktikanta Das has axed policy rates by 135 basis points.
RBI’s professional forecasters’ survey has projected bank credit growth at 12% for fiscal year 2019-20 and 12.9% for fiscal year 2020-2021.
Consumer price inflation quickened to 4.62% in October, breaching the 4% target for the first time since July 2018.
Economic growth has slowed to 4.5% in the September quarter, its weakest pace since 2013.
A 25 basis points repo rate cut by the MPC has already been factored in by the market.
The need of the hour is for fiscal and monetary policies to work in tandem with each other to boost economic growth and consumption, says Shanti Ekambaram, President – Consumer Banking, Kotak Mahindra Bank Ltd.
“The policy backdrop for the December MPC meeting will be the steady decline in the GDP growth trajectory and the increase in headline CPI inflation led by food prices," says Suvodeep Rakshit, VP Kotak Institutional Equities
In the October policy, all members of the MPC voted in favour of reducing the repo rate
The RBI may also increase its inflation forecast to above 4% in the medium term in the wake of food prices remaining high and the recent telecom tariff hike posing an upside risk to inflation in the coming months. In October, retail inflation has reached above 4.62%
MPC decision could turn real interest rates negative
Real interest rates -- the interest rates adjusted for inflation -- seem to be headed to negative territory after the December policy meeting by the Reserve Bank of India, depicting the grim situation facing the economy.
According to a DH poll of economists, the consensus seems to be that the central bank will again slash the key repo rate by 25 basis points (bps), while an overwhelming majority expect the inflation rate to be above 5% in November.
Read the full report here.
The lead indicators have been showing the economic growth has been overestimated by at least one percentage point. The RBI had, in October, slashed its forecast to 6.1% from 6.9%.
Most economists, polled by DH, have voted for a 25 basis point rate cut. But, this time around it will be important to see how sharply the RBI cuts its growth forecast for 2019-20 when it announces the policy.
A sharp decline in nominal GDP growth at 6% has almost ensured a rate cut because, among other things, it also indicates that the government does not have more fiscal firepower to fight the current slowdown. The fall in nominal GDP, which includes inflation, has shrunk the size of GDP much lower than Rs 211 lakh crore projected in the Union Budget, automatically overshooting the fiscal deficit. The reforms and tax cuts, undertaken in the recent month, will take time to show results.
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