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Mumbai: The Reserve Bank is unlikely to cut the benchmark <keyword id="20071327" type="General" weightage="20" keywordseo="interest-rate" source="keywords">interest rate</keyword> in its forthcoming bi-monthly monetary policy review later in the week as <keyword id="19999652" type="General" weightage="20" keywordseo="retail-inflation" source="keywords">retail inflation</keyword> is still a cause of concern, and there is a possibility of the Middle East crisis deteriorating further, impacting crude oil and commodity prices, say experts. Earlier this month, the government reconstituted the Reserve Bank's rate-setting panel -- <keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (MPC). The reconstituted panel, with three newly appointed external members, will commence its maiden meeting on Monday. MPC Chairman RBI Governor Shaktikanta Das will reveal the outcome of the three-day discussion on Wednesday (October 9). The <keyword id="19899810" type="General" weightage="100" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI) has kept the repo or short-term lending rate unchanged at 6.5 per cent since February 2023, and experts think some easing could only be possible in December. The government has tasked the central bank to ensure that Consumer Price Index (CPI) based retail inflation remains at 4 per cent with a margin of 2 per cent on either side. In the current context, experts feel that the RBI may not follow the US Federal Reserve, which lowered the benchmark rates by 50 basis points, and the central banks of some developed nations, which have reduced the interest rates. "We do not expect any change in the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> or stance by MPC. The reason is that inflation for September and October will be above 5 per cent, and the present low inflation is due to the base effect. Besides, core inflation is inching upwards," said Madan Sabnavis, Chief Economist, Bank of Baroda. Further, the recent Iran-Israel imbroglio can intensify, and there is uncertainty here, he said. "Hence, the status quo is the most likely option even for new members. Inflation forecast may be lowered by 10-20 bps and no change in GDP forecast likely," said Sabnavis. The central bank last hiked the repo rate to 6.5 per cent in February 2023 and since then, it has held the rate at the same level. Icra Chief Economist Aditi Nayar said that given the undershooting in the initial first quarter GDP growth relative to the MPC's forecast and the likely sizeable undershooting in the second quarter CPI inflation print as well, "we believe a stance change to neutral may be appropriate in the October 2024 policy review". This could be followed by a shallow rate-cutting cycle of 25 bps each in December 2024 and February 2025, she added. "The abundant monsoon offers some insurance for crop inflation. The impact of global political developments and geopolitical uncertainty on the growth inflation dynamics remains a risk," Nayar added. An HSBC report said three developments stand out -- softer growth numbers have trickled in recently, inflation has been falling, and the external environment has moved from rate hikes to cuts. "We believe the RBI doesn't gain from waiting any longer. We think it will change its stance from a hawkish 'withdrawal of accommodation' to 'neutral' in the upcoming 9 October policy meeting, followed by repo rate cuts of 25 bps each in the December and February meetings, taking the repo rate to 6 per cent," the report said. The RBI kept the repo rate unchanged at 6.5 per cent in its August bi-monthly review amid risks from higher food inflation. This was the ninth consecutive MPC meeting, which decided to maintain the status quo on the rate front. Pradeep Aggarwal, founder and chairman, Signature Global (India) Limited, said while the real estate industry, developer community, and homebuyers are hoping for an interest rate cut in the upcoming monetary policy review, the RBI is likely to hold on to the interest rate cuts for the tenth consecutive time. "The apex bank still seems uncomfortable with the overall retail inflation scenario, particularly food inflation. As such, it is expected to maintain the status quo. The recent interest rate cut by the US Federal Reserve has ignited similar hopes even in India, but the domestic scenario is very different," he added. SBM Bank India Head Treasury Mandar Pitale believed that the MPC has persistently advocated a restrictive policy until inflation aligns durably towards the 4 per cent target. "With the unfavourable base effect taking the next couple of CPI prints near 5 per cent plus or minus, it will pose a major challenge for MPC to start easing from the October meeting," Pitale said, adding that the MPC is also expected to deliberate upon the global factors like growth-inflation behaviour in developed economies. The government has appointed Ram Singh, Saugata Bhattacharya, and Nagesh Kumar as external members of the MPC. They have replaced Ashima Goyal, Shashanka Bhide, and Jayanth R Varma. Apart from the Governor, the other internal members are the RBI Deputy Governor in charge of monetary policy Michael Debabrata Patra and the Executive Director monetary policy department of RBI Rajiv Ranjan. In an off-cycle meeting in May 2022, the MPC raised the policy rate by 40 basis points and it was followed by rate hikes of varying sizes, in the subsequent meetings till February 2023. The repo rate was raised by 250 basis points cumulatively between May 2022 and February 2023.

Status-quo on interest rate likely, say experts ahead of RBI's policy review

The <keyword id="19922074" type="General" weightage="20" keywordseo="Reserve-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank" meta.hostid="261" meta.entityid="Reserve Bank">Reserve Bank</keyword> is expected to hold its key rates at the forthcoming <keyword id="22706079" type="General" weightage="20" keywordseo="policy-review" source="keywords">policy review</keyword>, but may sound more confident about reaching its 4% inflation objective, a foreign brokerage said on Wednesday. The rate-setting panel may prefer to stick to the 'withdrawal of accommodation' stance of the <keyword id="20104157" type="General" weightage="20" keywordseo="monetary-policy" source="keywords">monetary policy</keyword>, HSBC said in the report on the eve of the <keyword id="19899808" type="General" weightage="100" keywordseo="RBI" source="keywords">RBI</keyword> <keyword id="19918491" type="General" weightage="20" keywordseo="MPC" source="keywords">MPC</keyword>'s decision. "While it's a close call, we also think the policy stance will remain unchanged, even as the RBI sounds more confident than before about getting to its 4% <keyword id="20661141" type="General" weightage="20" keywordseo="inflation-target" source="keywords">inflation target</keyword>," it said, listing out the aspects it will watch out for in the document or the resolution. These include any softness in tone around increased confidence of getting to 4% inflation durably, or a change in growth or inflation forecasts, and, further commentary around the use of OMO (open market operations) sales to take out excess liquidity. In the background of another member dissenting at the last policy review, the brokerage said the number of MPC members calling for a rate cut or change in stance will also be watched keenly. Apart from this, it said any more colour on the plans to change regulatory requirements on the <keyword id="20479869" type="General" weightage="20" keywordseo="liquidity-coverage-ratio" source="keywords">liquidity coverage ratio</keyword>, which is reported to have a bearing on banks' profitability, will also be watched, it said. On the stance questions, there are several points in support of softening from the current "hawkish" posturing, the brokerage said, adding that there are an equal number of aspects against such a move as well. Factors such as global turmoil, improving rains, soft core inflation, weaker credit growth and fiscal consolidation support a softening of the stance, while on the other side, there are competing ones like long wait for a durable fall in food inflation, loose financial conditions, OMO sales and growth being strong on the other side, it said.

RBI to hold rates, may sound more confident of reaching inflation target, says report

The Reserve Bank on Thursday proposed to create a <keyword id="22711172" type="General" weightage="20" keywordseo="public-repository" source="keywords">public repository</keyword> of <keyword id="21305551" type="General" weightage="100" keywordseo="digital-lending-apps" source="keywords">digital lending apps</keyword> in a bid to address the problems arising from mushrooming <keyword id="22711171" type="General" weightage="20" keywordseo="unauthorised-players" source="keywords">unauthorised players</keyword> in the segment. In another significant move, the central bank proposed to introduce a facility of "<keyword id="22710839" type="General" weightage="20" keywordseo="Delegated-Payments" source="keywords">Delegated Payments</keyword>" in UPI to enable an individual to allow another individual to make <keyword id="19957378" type="General" weightage="20" keywordseo="UPI-transactions" source="keywords">UPI transactions</keyword>. In a <keyword id="13144094" type="General" weightage="20" keywordseo="post-monetary-policy-review" source="Orion">post-monetary policy review</keyword> address, <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> <keyword id="20595794" type="General" weightage="20" keywordseo="Governor-Shaktikanta-Das" source="keywords">Governor Shaktikanta Das</keyword> said the central bank has taken several measures for the orderly development of the <keyword id="12577431" type="General" weightage="20" keywordseo="digital-lending-ecosystem" source="Orion">digital lending ecosystem</keyword> in India. In a bid to address the problems arising from unauthorised digital lending apps (DLAs), he said the RBI proposes to create a public repository of DLAs deployed by its regulated entities. "The regulated entities (REs) will report and update information about their DLAs in this repository. This measure will help the consumers to identify the unauthorised lending apps," Das said. On introduction of 'Delegated Payments' through UPI, the Governor said the facility would enable an individual (primary user) to allow another individual (secondary user) to make UPI transactions up to a limit from the primary user's bank account without the need for the secondary user to have a separate bank account linked to UPI. This, he added, will further deepen the reach and usage of digital payments. The central bank also announced an increase in the transaction limit for tax payments through UPI to Rs 5 lakh. Currently, the transaction limit for UPI is Rs 1 lakh, except for certain categories of payments which have higher transaction limits. "It has now been decided to enhance the limit for tax payments through UPI from Rs 1 lakh to Rs 5 lakh per transaction. This will further ease tax payments by consumers through UPI," Das said. The Governor also announced measures to speed up cheque payment which will benefit both the payer and the payee. At present, cheque clearing through Cheque Truncation System (CTS), operates in a batch-processing mode and has a clearing cycle of up to two working days. "It is proposed to reduce the clearing cycle by introducing continuous clearing with 'on-realisation-settlement' in CTS," Das said. This means that cheques will be cleared within a few hours on the day of presentation.

RBI to set up public repository of digital lending apps to check unauthorised players

The country's <keyword id="20344433" type="General" weightage="100" keywordseo="forex-reserves" source="keywords">forex reserves</keyword> touched a <keyword id="19953076" type="General" weightage="20" keywordseo="record-high" source="keywords">record high</keyword> of <keyword id="22711333" type="General" weightage="20" keywordseo="USD-675-billion" source="keywords">USD 675 billion</keyword> on August 2, <keyword id="22204269" type="General" weightage="20" keywordseo="Reserve-Bank-Governor" source="keywords">Reserve Bank Governor</keyword> <keyword id="19913110" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="keywords">Shaktikanta Das</keyword> said on Thursday. The previous all-time high for the kitty was USD 670.857 billion on July 19 this year, and the last reported reserve was USD 667.386 billion as on July 26. Das said overall, the country's <keyword id="20811151" type="General" weightage="20" keywordseo="external-sector" source="keywords">external sector</keyword> "remains resilient" as indicated by an improvement in key indicators. "We remain confident of meeting our <keyword id="22711421" type="General" weightage="20" keywordseo="external-financing-requirements" source="keywords">external financing requirements</keyword> comfortably," he said in his statement after the review of the <keyword id="20104157" type="General" weightage="20" keywordseo="monetary-policy" source="keywords">monetary policy</keyword>. Das said <keyword id="20015748" type="General" weightage="20" keywordseo="foreign-portfolio-investors" source="keywords">foreign portfolio investors</keyword> turned net buyers in the domestic market from June 2024 with net inflows of USD 9.7 billion during June- to August 6, after witnessing outflows of USD 4.2 billion in April and May. Gross foreign direct investment (FDI) rose by more than 20 per cent in April-May 2024, while net FDI flows doubled during this period compared to the corresponding period of the previous year, the Governor said. External commercial borrowings by Indian entities moderated, but non-resident deposits were higher in April-May, he said.

India's forex reserves at record high of USD 675 billion, external sector resilient: RBI Governor Shaktikanta Das

Mumbai (Maharashtra) [India], April 5 (ANI): <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> Governor Shaktikanta Das will announce the outcome of the first <keyword id="6375120" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="Orion">Monetary Policy Committee</keyword> (MPC) meeting of the financial year 2024-2025 on Friday. The central banking authority of India has kept the <keyword id="43352" type="General" weightage="20" keywordseo="repo-rate" source="Orion">repo rate</keyword> unchanged for the last six consecutive MPC meetings and according to experts it is likely to maintain the status quo on interest rates this time too. The repo rate, is the interest rate at which banks draw funds from <keyword id="30067" type="General" weightage="20" keywordseo="RBI" source="Orion">RBI</keyword> to overcome short-term liquidity mismatches. Monetary Policy Committee was constituted under the Reserve Bank of India Act, 1934. MPC is a six-member committee comprising three members from RBI including Governor Shaktikanta Das and three members appointed by the Central government. The two-day review meeting of the MPC that commenced on April 3 concludes today. The RBI had maintained the status quo on policy rates and stances in its last review, which was held in February 2024. The decision however was not unanimous and one member has recommended a rate cut of 25 basis points and policy change stand to neutral. Since the last policy, rating agencies have revised India's growth forecast upwards. <keyword id="7706673" type="General" weightage="20" keywordseo="Finance-Minister-Nirmala-Sitharaman" source="Orion">Finance Minister Nirmala Sitharaman</keyword>, recently said that India will grow over 8 per cent in FY24. Inflation has dropped and has remained under the range of comfort zone. Consumer Price Index inflation was 5.1 per cent in February 2024, up from over 5.5 per cent in December 2023. The core CPI inflation, excluding food and beverages, was at a low of 3.5 per cent in February 2024. However, food inflation at above 7 per cent was a concern, but with a recent cut in the prices of petrol, diesel and LPG, it is likely to further fall in March and may come below 5 per cent. Meanwhile, the India Meteorological Department's (IMD) recent announcement of above-normal temperatures during April-June may be a concern regarding rise in prices of vegetable, fruits and other perishable items. Also prices of rice, pulses have shown an upward trend which may be a concern for the MPC while taking a decision. However, softening prices of non-food items will give some relief to the committee. Generally, normal monsoons follow above normal temperatures, presuming that the average CPI inflation is likely to be in the RBI's comfort zone of 4-6 per cent in FY25. According to official data, retail inflation in India eased a tad in February to 5.09 per cent from 5.10 per cent the prior month, due to the deceleration of prices in all categories except food. Experts believe that the RBI is unlikely to change its policy stance before the August 2024 MPC review and any rate cut is unlikely before that. The US Fed has also recently indicated that it is not in a hurry to cut rates. All these suggest that the RBI, too, is unlikely to go for a rate cut before the October 2024 policy. The next MPC meetings of the RBI have been scheduled this year for June, August, October, December and February 2025.

RBI Monetary Policy Meeting: Central Bank likely to keep rates steady

The Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) has started its three-day monetary policy committee (MPC) meeting in Mumbai on Tuesday. The meeting will conclude on Thursday, when the RBI will announce its decisions on the <keyword id="20094323" type="General" weightage="100" keywordseo="repo-rate" source="keywords">repo rate</keyword> and other matters. The repo rate, which has been maintained at 6.5 per cent since it was last increased in February 2023, is widely expected by experts to remain unchanged for the ninth consecutive bi-monthly policy review. Experts highlight that <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> in India remains above the RBI's target range, making it unlikely that the central bank will implement policy cuts until inflation reaches the target of 4 per cent. However, the expert added that the RBI may consider rate cuts in the October meeting. Banking expert Ashutosh Khajuria commented: "Monetary Policy Committee (MPC) may continue to hold the policy signalling Repo rate and wait for <keyword id="19979707" type="General" weightage="20" keywordseo="Consumer-Price-Inflation" source="keywords">Consumer Price Inflation</keyword> to decisively fall below 4 per cent, the target rate. For the present, the continuation of the current stance is widely expected. MPC in India may change the stance and rate action by the beginning of the second half of the year in their October meeting at the earliest." The experts also noted that while <keyword id="20196112" type="General" weightage="20" keywordseo="core-inflation" source="keywords">core inflation</keyword> has been contained and commodity prices, particularly metals, have dropped by 15-20 per cent from their 2024 peak, food inflation remains a concern and needs to be closely monitored to ensure stability in overall CPI numbers. The Managing Director of a major bank, who preferred not to be named, told ANI: "During the last policy meeting we could see some voting in favour of a <keyword id="19920203" type="General" weightage="20" keywordseo="rate-cut" source="keywords">rate cut</keyword>. At the same time, we could see The Reserve Bank of India's (RBI) Governor Shaktikanta Das on July 11 said it is too early to talk on the interest rate cut due to the uncertain economic environment and inflation remaining close to five per cent. Considering both, our expectation is that the rate cut cycle may start from the next meeting and no change in <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> this time." RBI Governor Shaktikanta Das had also emphasised in the last policy briefing that food inflation is still a concern and that the regulator is not in a hurry to make a decision on rate cuts. A recent report by the State Bank of India (SBI) also noted that Consumer Price Inflation in India is expected to remain around 5 per cent for the financial year 2024-25, except for the months of September and October.

Repo rate cut unlikely in ongoing MPC meeting, but RBI may change it during October policy review: Experts

The <keyword id="6354335" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="Orion">Reserve Bank of India</keyword> (<keyword id="30067" type="General" weightage="20" keywordseo="RBI" source="Orion">RBI</keyword>), on Friday, left the key policy rate unchanged at 6.5 per cent in its monetary policy review for the seventh consecutive time, with the aim of keeping <keyword id="22195" type="General" weightage="20" keywordseo="inflation" source="Orion">inflation</keyword> in check and ensuring that the economy moves on a stable growth path. <keyword id="64190" type="General" weightage="20" keywordseo="RBI-Governor" source="Orion">RBI Governor</keyword> <keyword id="6359111" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="Orion">Shaktikanta Das</keyword> said that the decision was made with five of the six members of the <keyword id="6375120" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="Orion">Monetary Policy Committee</keyword> (MPC) favouring no change in the <keyword id="43352" type="General" weightage="100" keywordseo="repo-rate" source="Orion">repo rate</keyword>. Das said the MPC decided to continue with the "withdrawal of accommodation" stance to control inflation. The RBI would continue with its disinflationary policy to ensure a stable growth path for the economy, he added. Das said that <keyword id="120452" type="General" weightage="20" keywordseo="food-price-inflation" source="Orion">food price inflation</keyword> continues to weigh on the trajectory going ahead. The Central bank last changed rates in February 2023, when the repo rate was hiked to 6.5 per cent. The RBI had in fact raised rates by 2.5 per cent between May 2022 and February 2023, after which they have been kept on hold to support economic growth despite inflationary pressures in the past. Repo rate is the interest rate at which the RBI gives short-term loans to banks to enable them to meet their liquidity requirements. Inflation has now come down to around 5 per cent and is well below the RBI's upper tolerance limit of 6 per cent, but the Central bank is determined to bring it down to its medium-term target of 4 per cent, which it considers ideal for stable growth in the economy. RBI Governor Shaktikanta Das has stated several times that although inflation has been moderating, unless it falls to 4 per cent on a durable basis, the Central bank will not think of changing its policy focus. Prime Minister Narendra Modi said at an RBI event on Monday that the Central bank must give top priority to growth but at the same time, focus on trust and stability. With India continuing to clock the fastest GDP growth among the major economies, the RBI has ample headroom to keep interest rates on hold in the near term without hurting growth. The Indian economy had thrown up a surprise 8.6 per cent growth in the October-December quarter driven by government expenditure on big-ticket infrastructure projects and strong domestic demand. The macroeconomic fundamentals of the economy have turned stronger with the fiscal deficit well in control following robust tax collections. The lower fiscal deficit will help control inflation as well as leave more money in the banking system for corporates to take loans for investments as the government needs to borrow less. Economic indicators for the January-March quarter have also been encouraging with exports growing at a decent pace despite the disruption in ship movement due to the Houthi attacks in the Red Sea region. This has led to a decline in the current account deficit reflecting a stronger external balance of payments position.

You Searched For "Monetary Policy Review" and got 7 results

Status-quo on interest rate likely, say experts ahead of RBI's policy review

PTI

RBI to hold rates, may sound more confident of reaching inflation target, says report

PTI

RBI to set up public repository of digital lending apps to check unauthorised players

PTI

India's forex reserves at record high of USD 675 billion, external sector resilient: RBI Governor Shaktikanta Das

PTI

RBI Monetary Policy Meeting: Central Bank likely to keep rates steady

ANI

Repo rate cut unlikely in ongoing MPC meeting, but RBI may change it during October policy review: Experts

ANI

RBI leaves key repo rate unchanged, focus on keeping inflation in check

IANS

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