That's all for today readers. Thank you for tuning in to our live coverage of the RBI MPC meet. For more latest news visit www.deccanherald.com.
RBI extends one-time restructuring scheme for MSME advances
The Reserve Bank of India (RBI) has decided to extend the benefit of one-time restructuring without an asset classification downgrade to standard accounts of GST registered MSMEs that were in default on January 1, 2020.
The restructuring under the scheme has to be implemented latest by December 31, 2020, RBI said in a statement on Thursday.
Read the full report here.
Forex reserves jump to $471.8 billion as of Feb 5, up over 58% YoY: Das
RBI Governor says monetary policy transmission remains seizable so far
Markets jubilant
The equity markets seem to have been discounting a possibility of RBI hiking the repo rate as well. As soon as the RBI announced the decision to hold on to the rates, BSE Sensex201.01 points, while Nifty surged59.10 points.
Decision to hold rates unanimous
Chetan Ghate, Pami Dua, Ravindra H. Dholakia, Janak Raj, Michael Debabrata Patra and Shaktikanta Das -- all MPC members -- voted in favour of the decision.
Growth outlook for H1'FY21 lowered
The RBI expects the growth to be in the range of 5.5-6.0% for H1 of FY21. In December it had projected it at5.9-6.3%. For the full year FY 21, the central bank expects the growth to be at 6%.
Inflation projections up
The central bank has revised CPI inflation projection upwards to 6.5% for Q4:2019-20; 5.4-5.0% for H1:2020-21; and 3.2% for Q3:2020-21, with risks broadly balanced
Bond yields down
The bond yields on the 10-year G-sec bonds is down to6.500% ahead MPC verdict.
FIIs jittery before the MPC verdicts
The foreign funds seem to be jittery ahead of the MPC verdict. The rupee is down 2 paise viz a viz dollar. Any foreign fund outflow leads to a stronger dollar and a weaker rupee.
RBI predicted GDP growth at 5% in December MPC
The Reserve Bank of India has lowered growth projection thrice this year, cumulatively by 2.1 percentage points to 5% by the December MPC.
GDP forecast unlikely to be changed
The central bank is unlikely to change the GDP forecast for the FY20.
“From a macroeconomic perspective, growth continues to be a challenge. GDP for FY’20 is likely to be around 4.8%-5%and it is estimated that FY’21 is likely to see growth in the 5.5% to 6% range. Recent high-frequency indicators show some green shoots, including IIP numbers for Jan. However, we need to see how the growth trajectory pans out," saysShanti Ekambaram, President – Consumer Banking, Kotak Mahindra Bank Ltd.
Markets flat ahead of MPC verdict
The equity markets are flat ahead of the MPC verdict. BSE Sensex is down14.65 points, while NSE Nifty is up 3.55 points.
RBI will have to do heavy lifting to boost growth by cutting rates: HDFC Bank
The Budget does not provide any counter-cyclical stimulus to boost consumption, and the Reserve Bank will have to do the heavy lifting to boost growth by cutting rates, the country's largest private sector lender HDFC Bank said on Wednesday.
The budget announcements are also not inflationary in nature, and the Reserve Bank can cut rates as early as in the June review, it said, adding that the rate-setting monetary policy committee will opt for a status quo on Thursday.(PTI)
High inflation, higher household borrowing by govt may force RBI to go for status quo
A five-year high inflation, a substantial rise in government deficit projections and a whopping increase in its borrowing from the household savings this year will weigh heavy on the Reserve Bank of India's mind while it takes the monetary policy decision to be announced on Thursday.
As long as the government keeps cornering the household savings, banks will not be able to cut deposit rates and lending rates cannot come down, if deposit rates remain high, thus making the RBI rate cuts meaningless.
Read the full report here.
In December, the retail inflation, peaked to a five-year high of 7.3%, mainly due to costlier vegetables, specifically onion and tomato.
This will be the RBI's last monetary policy for the current financial year. This comes in the wake of the government estimating an economic growth of 5% in the current financial year on the back of factors such as a slowdown in domestic and global economy, including weakening consumption demand in the country.
The macro-economic developments emerging out of the budget for 2020-21 point towards a pause in RBI policy, though certain economists believe there could be a mild rise in rates.
"The Budget does not provide any counter-cyclical stimulus to boost consumption, and the Reserve Bank will have to do the heavy lifting to boost growth by cutting rates," according to the country's largest private sector lender HDFC Bank. It said the monetary policy committee may opt for a status quo as the headline inflation print will continue to be above 7%, much higher than the RBI's upper band of 6%, the bank said in a report.
As long as the government keeps cornering the household savings, banks will not be able to cut deposit rates and lending rates cannot come down, if deposit rates remain high, thus making the RBI rate cuts meaningless.
Hello readers and welcome to our live coverage of the RBI's Monetary Policy Committee meeting. A five-year high inflation, a substantial rise in government deficit projections and a whopping increase in its borrowing from the household savings this year will weigh heavy on the Reserve Bank of India's mind while it takes the monetary policy decision to be announced on Thursday. Stay tuned for live updates.
Deccan Herald is on WhatsApp Channels| Join now for Breaking News & Editor's Picks