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<ul><li>The <keyword id="19899810" type="General" weightage="20" 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>’s <keyword id="20104157" type="General" weightage="20" keywordseo="monetary-policy" source="keywords">monetary policy</keyword> meeting is set to begin today.</li><li>The central bank will announce the outcome of the <keyword id="22684891" type="General" weightage="20" keywordseo="MPC-meeting" source="keywords">MPC meeting</keyword> on October 9.</li><li><keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> has kept the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> unchanged for the last nine consecutive meetings.</li></ul>The Reserve Bank of India (RBI) is set to begin its three-day monetary policy meeting on Monday and will run from October 7 to October 9. All eyes are on the outcome, as the central bank has kept the repo rate unchanged for the last nine consecutive meetings. The repo rate, currently at 6.50%, has remained steady since the RBI adopted a cautious stance to balance inflation control and economic growth. The Monetary Policy Committee (MPC), headed by RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="keywords">Shaktikanta Das</keyword>, is expected to weigh key factors like inflationary trends, global economic uncertainties, and domestic growth prospects. Inflation continues to be a challenge, particularly in food and fuel prices, which saw a surge earlier this year. As per the data from the Ministry of Statistics &amp; Programme Implementation, though the All India Consumer Price inflation in August was 3.65%, which is under the RBI target band the food inflation stands at 5.65% and it remains above the RBI's medium-term target of 4%. Despite these inflationary pressures, the RBI has opted for a status quo on the repo rate, primarily to support economic recovery post-pandemic. However, there are rising concerns that external factors, like the rising global crude oil prices and tensions in West Asia, may compel the RBI to reconsider its current stance. Earlier this month the central government appointed three new members to the monetary policy committee. The MPC comprises three members from the RBI and three external members appointed by the Central Government. The newly reconstituted committee consists of the Governor of the Reserve Bank of India as the Chairperson, ex officio; the Deputy Governor of the Reserve Bank of India, in charge of monetary policy--Member, ex officio, and one officer of the Reserve Bank of India, nominated by the Central Board -- Member, ex officio. The new external members included in the MPC are Professor Ram Singh, Director, Delhi School of Economics, University of Delhi, Saugata Bhattacharya, economist; and Dr. Nagesh Kumar, Director and Chief Executive, Institute for Studies in Industrial Development. Market participants and analysts are closely monitoring this meeting for any forward guidance on future rate actions. Many believe the central bank will continue its wait-and-watch approach, but a surprise rate hike cannot be entirely ruled out. On September 18, the <keyword id="19901377" type="General" weightage="20" keywordseo="US-Federal-Reserve" source="keywords">US Federal Reserve</keyword> announced a steep 50 basis points interest cut in its review meeting. US Fed announced the rate cuts after holding interest rates steady for eight straight meetings. The outcome of the MPC meeting will be announced on October 9 and will set the tone for future monetary policies amid the changing global economic landscape. The Reserve Bank of India (RBI) will commence its three-day monetary policy meeting on Monday, October 7th, and continue until October 9th. The result of this meeting is eagerly anticipated, as the central bank has maintained a steady repo rate for the past nine consecutive meetings. The repo rate has remained at 6.50% since the RBI adopted a cautious approach to balance inflation control and economic growth. The Monetary Policy Committee (MPC), led by RBI Governor Shaktikanta Das, will consider various factors, including inflationary trends, global economic uncertainties, and domestic growth prospects. Inflation remains a challenge, particularly in food and fuel prices, which surged earlier this year. According to data from the Ministry of Statistics &amp; Programme Implementation, All India Consumer Price inflation in August was 3.65%, within the RBI's target band, however, food inflation stands at 5.65%, exceeding the RBI's medium-term target of 4%. Despite inflationary pressures, the RBI has opted to maintain the repo rate to support economic recovery post-pandemic. Nonetheless, rising concerns about external factors, such as increasing global crude oil prices due to tensions in West Asia, may prompt the RBI to reassess its current stance. Earlier this month, the central government appointed three new members to the monetary policy committee. The MPC consists of three members from the RBI and three external members appointed by the Central Government. It is worth noting that on September 18, the US Federal Reserve announced a substantial 50 basis points interest rate cut in its review meeting, reversing its previous stance of holding rates steady for eight consecutive meetings. With inputs from ANI. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/september-auto-sales-automakers-report-a-decline-mahindra-and-mahindra-overtakes-tata-motors/articleshow/113925972.cms">September Auto sales – Automakers report a decline, Mahindra and Mahindra overtakes Tata Motors</a> <a href="https://www.businessinsider.in/business/auto/news/ola-electric-continues-to-lose-market-share-as-bajaj-auto-and-tvs-motor-gain/articleshow/113900252.cms">Ola Electric continues to lose market share as Bajaj Auto and TVS Motor gain</a> <a href="https://www.businessinsider.in/business/telecom/news/airtel-is-using-ai-powered-technology-to-block-spam-calls-and-messages/articleshow/113691942.cms">Airtel is using AI-powered technology to block spam calls and messages</a>

RBI's monetary policy committee meeting begins today, announcement on October 9

<ul><li>The <keyword id="19899810" type="General" weightage="20" 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> will conclude the three-day <keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (<keyword id="19918491" type="General" weightage="20" keywordseo="MPC" source="keywords">MPC</keyword>) meeting today.</li><li>The central bank is expected to announce its decision on policy rates.</li><li>The <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> has maintained the <keyword id="20094323" type="General" weightage="100" keywordseo="repo-rate" source="keywords">repo rate</keyword> at 6.50% for the past nine meetings.</li></ul>The Reserve Bank of India (RBI) is set to conclude the three-day Monetary Policy Committee (MPC) meeting today, with Governor <keyword id="19913110" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="keywords">Shaktikanta Das</keyword> expected to announce the central bank's decision on policy rates. The meeting, which <a href="https://www.businessinsider.in/finance/news/rbis-monetary-policy-committee-meeting-begins-today-announcement-on-october-9/articleshow/113999887.cms">began</a> on October 7, has garnered significant attention, as the RBI has maintained the repo rate at 6.50% for the past nine meetings. The repo rate has remained steady since the RBI adopted a cautious stance to balance inflation control and <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword>. Key factors that the MPC is weighing include persistent inflationary pressures, particularly in food prices, as well as global economic uncertainties. According to data from the Ministry of Statistics &amp; Programme Implementation, while All India Consumer Price Index (CPI) inflation moderated to 3.65% in August--within the RBI's target band of 2-6%. <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">Food inflation</keyword> remains elevated at 5.65%, above the central bank's medium-term target of 4%. This, coupled with rising global crude oil prices due to geopolitical tensions in West Asia, has intensified concerns over inflation. Despite these challenges, the RBI has so far opted for a status quo on the repo rate, aiming to foster economic recovery after the pandemic. However, today's announcement will be closely watched to see if the central bank shifts its stance, especially given the external pressures and uncertainties surrounding global markets. Economists, however, have noted that the RBI will not make any changes in its policy stance before December. "With the focus on taming headline inflation, the RBI is likely to hold the rates although the core inflation is within the limit. It is possible the RBI may shift to the neutral stand" said M Govind Rao, Member, of the Fourteenth Finance Commission and former Director, of the National Institute of Public Finance and Policy. On September 18, the US Federal Reserve announced a steep 50 basis points interest cut in its review meeting. US Fed announced the rate cuts after holding interest rates steady for eight straight meetings. "In this overarching macroeconomic setting of heightened geopolitical tensions, core inflation inching upwards, oil price volatility, and high food inflation, we anticipate a change in the RBI's policy stance from "withdrawal of accommodation" to "neutral" at its forthcoming MPC meeting on October 9, 2024. However, we do not see any rate action coming and the benchmark interest rates may not undergo any change" said Manoranjan Sharma, Chief Economist, Infomerics Ratings. Earlier this month the central government appointed three new members to the monetary policy committee. The MPC comprises three members from the RBI and three external members appointed by the Central Government. With inputs from ANI. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/byd-emax-7-electric-mpv-launched-in-india-starting-at-26-9-lakh/slidelist/114046121.cms">BYD eMax 7 electric MPV launched in India starting at ₹26.9 lakh</a> <a href="https://www.businessinsider.in/personal-finance/news/heres-how-a-reddit-user-was-able-to-get-an-iphone-16-at-under-27000/articleshow/114035179.cms">Here’s how a Reddit user was able to get an iPhone 16 at under ₹27,000</a> <a href="https://www.businessinsider.in/stock-market/news/hyundai-swiggy-ather-upcoming-large-ipos-in-india/slidelist/114014140.cms">Hyundai To Swiggy: Everyone wants to cash in on the IPO bonanza</a>

RBI MPC announcement today: Rates unlikely to change, RBI may change stance to neutral

<ul><li>The Monetary Policy Committee (<keyword id="19918491" type="General" weightage="20" keywordseo="mpc" source="keywords">MPC</keyword>) has decided to keep the repo rate unchanged at 6.5%. </li><li>Economists had expected the MPC to keep key rates unchanged due elevated inflation in December 2023.</li><li>A few experts hoped that it would change its stance to ‘neutral’ given the tight liquidity situation. </li></ul> The <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>)’s rate setting panel – the Monetary Policy Committee – decided to keep its key lending rate (repo rate) unchanged at 6.5% on Thursday. It also decided to remain focussed on the ‘withdrawal of accommodation’ stance. RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword> said that both the decisions have been taken with five out of six members voting in favour. Governor Das said there was further room for transmission. “Taking into account this growth-inflation dynamics and the fact that transmission of the cumulative 250 bps policy rate hike is still underway, the MPC decided to keep the policy repo rate unchanged at 6.50%. The MPC will carefully monitor any signs of generalisation of food price pressures which can fritter away the gains in easing of core inflation,” he said. The MPC also raised the FY24 real GDP growth projection to 7.3% from 7%. It also set FY25’s real GDP growth projections at 7%. “The momentum in economic activity seen in FY24 is expected to continue in FY25 as well,” Das said. It also projected FY25’s Q1 GDP growth at 7.2%, Q2 to see 6.8% growth, Q3 at 7% and Q4 at 6.9%. The MPC also retained FY24’s retail inflation projections at 5.4%, but set FY25’s inflation projections at 4.5%. It sees inflation for Q1 of FY25 at 5%, Q2 at 4%, Q3 at 4.6% and Q4 at 4.7%. “Monetary policy was supported by pro-active supply-side measures by the government. That said, the job is not yet finished, and we need to be vigilant about new supply shocks that may undo the progress made so far,” Das said. Das said that elevated levels of public debt was raising serious concerns in many economies including advanced economies. “On one hand, the odds of soft landing in the global economy increased. But the other hand, wars and conflicts add uncertainties to the outlook,” the governor said. Experts have been expecting the monetary policy committee (MPC) to keep its key rates unchanged. India’s retail inflation for December 2023 came in at 5.7%, which is much higher than RBI’s comfort level of 4%. “We expect the RBI to continue the pause stance in the upcoming policy. Strong US non-farm payroll data and wages seem to have pushed back on market expectations for a quick pivot to rate cuts. First rate cut on table from June or August 2024 looks the best bet now,” said a report by SBI Ecowrap. Ajit Kabi, research analyst at LKP Securities said that the RBI is likely to support economic growth with a cautious stance on inflation. “Consequently, we expect the unchanged policy rate and possibility of a shift in stance to NEUTRAL. Additionally, RBI may take steps to improve liquidity conditions. We expect a policy rate cut by June 24,” he added. There has been a pressure of liquidity which made a few experts hope that it could change its stance from ‘withdrawal of accommodation’. “There is a strong case for the RBI to change its stance from ‘withdrawal of accommodation’ to ‘neutral’. Financial conditions have tightened a lot in the last few quarters. Real rates are reasonably high and likely to increase further as inflation is trending down,” said Pankaj Pathak, Fund Manager- Fixed Income, Quantum AMC. While growth in deposits is much higher than last year on YTD basis as of January 12, the increase in credit and investments at ₹22.25 lakh crore is higher than that of deposits at ₹18.2 lakh crore. In terms of growth rates on a year-to-date basis, says Bank of Baroda data. Liquidity condition has also tightened with banking system liquidity running in deficit of over ₹2 lakh crore on daily basis. “Under these conditions there is some part of the market segment that believes that a change in stance is possible, though we believe that this will not be the case. The fact that the corridor of call rates is being maintained at between repo and Marginal Standing Facility (MSF0 rate, is indicative of the fact that the withdrawal of liquidity position would continue,” said <keyword id="20102121" type="General" weightage="20" keywordseo="madan-sabnavis" source="keywords">Madan Sabnavis</keyword>, chief economist at Bank of Baroda.

RBI hikes GDP growth projection for FY24 to 7.3%, keeps rates, stance unchanged

<ul><li>The Central Board of Employees' <keyword id="45028" type="General" weightage="20" keywordseo="provident-fund" source="Orion">Provident Fund</keyword> Organisation (<keyword id="6372438" type="General" weightage="80" keywordseo="epfo" source="Orion">EPFO</keyword>) has recommended an 8.15% interest rate to be credited on provident funds for the financial year 2022-23.</li><li>In March 2022, the government declared an 8.1% interest rate for more than its six crore members, which was the lowest since 1977-78.</li><li>The recommendation involves the distribution of more than ₹90,000 crore in the members' account on the total principal amount of about ₹11 lakh crore.</li></ul>The Central Board of Employees' Provident Fund Organisation (EPFO) has recommended an 8.15 per cent interest rate to be credited on provident funds for the financial year 2022-23. In March 2022, the government declared an 8.1 per cent interest rate for more than its six crore members, which was the lowest since 1977-78. The recommended interest rate for 2022-23 would be officially notified in the government gazette after approval of the Ministry of Finance, following which EPFO would credit the rate of interest into its subscribers' accounts. The recommendation involves the distribution of more than Rs 90,000 crore in the members' account on the total principal amount of about Rs 11 lakh crore. In 2021-22, the payment outgo and principal amounts were Rs 77,425 crore and Rs 9.56 lakh crore, respectively. "The total income recommended for being distributed is the highest to date. The growth in income and the principal amount is respectively more than 16 per cent and 15 per cent as compared to the last financial year 2021-22," the Ministry of Labour and Employment said in a release on Tuesday. EPFO is a social security organization responsible for providing social security benefits in the form of Provident, Pension and Insurance Funds to the organized workforce of the country. Separately, the provisional payroll data showed a total of 14.86 lakh net members were added in the month of January 2023. Out of the total members added during the month, around 7.77 lakh new members have come under the ambit of EPFO for the first time. Among the newly joined members, the highest enrolment is registered in the age group of 18-21 years with 2.26 lakh members, followed by the age group of 22-25 years with 2.06 lakh members. The age groups of 18-25 years constitute 55.52 per cent of the total of new members during the month of January. For the month of January 2023, it said 3.54 lakh members have exited the fold of EPFO. This is the lowest exit in the last four months. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/top-chatgpt-4-plugins-from-math-physics-and-language-tutor-to-vacation-planner/articleshow/99036667.cms">Top ChatGPT 4 plugins: From math, physics and language tutor to vacation planner</a> <a href="https://www.businessinsider.in/finance/banks/news/rbis-mpc-could-pause-rate-hikes-in-april-to-gauge-the-impact-of-hikes-so-far-sbi-research/articleshow/99030220.cms">RBI’s MPC could pause rate hikes in April to gauge the impact of hikes so far: SBI Research</a> <a href="https://www.businessinsider.in/business/corporates/news/layoffs-coming-to-the-indian-it-sector-analysts-say-accentures-jobs-cuts-offers-a-blueprint/articleshow/98970175.cms">Layoffs coming to the Indian IT sector? Analysts say Accenture’s jobs cuts offers a ‘blueprint’</a>

Employees' provident fund interest rate fixed at 8.15% for 2022-23

<ul><li>The <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (<keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword>) has postponed the upcoming meeting of <keyword id="6375120" type="ORGANIZATION" weightage="20" keywordseo="monetary-policy-committee">Monetary Policy Committee</keyword> (MPC).</li><li>The new dates will be announced ‘shortly’, according to the notice issued by India’s apex bank. </li><li>The government is yet to announce its new nominations for the committee with the tenure of the current external members — Ravindra Dholakia, Pami Dua and Chetan Gate — set to expire on September 30. </li></ul>The Reserve Bank of India (RBI) has postponed the meeting of the Monetary Policy Committee (MPC) that was scheduled to take place starting September 29 through to October 1. The new dates will be announced ‘shortly’, according to the <a href="https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR40014EDCE17EA504028927F4652FE40441B.PDF">RBI’s notice.</a> Even though the central bank did not specify why it had to push the meeting forward, it’s likely because the new members of the MPC haven’t been announced yet. The tenure for three of the external members — Ravindra Dholakia, Pami Dua and Chetan Gate — is set to expire on September 30. Government yet to announce MPC’s new faces The MPC consists of 6 members. Three members are from the central bank and the other three are external — nominated by the government. The central government members each hold a term of four years from the date of appointment and are not eligible for re-appointment. The MPC recently replaced Janak Raj, an executive director at the RBI and MPC member who retired in June, with Mridul Saggar. The RBI had earlier approached the government to extend the tenure for these three till 31 March 2021 in view of the coronavirus pandemic. But, the government turned the request down. A panel headed by the Department of Economic Affairs secretary Tarun Bajaj is currently on the lookout for new eligible candidates. The search committee also includes RBI Governor Shaktikanta Das. However, the government is yet to announce the new names for external MPC members. SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/sbi-warns-customers-to-beware-of-whatsapp-calls-and-scam-messages/articleshow/78361332.cms">SBI warns customers to beware of WhatsApp calls and scam messages</a> <a href="https://www.businessinsider.in/finance/banks/news/banks-stocks-hdfc-icici-sbi-kotak-mahindra-indusind-react-to-sc-verdict-on-moratorium/articleshow/78358550.cms">Bank stocks gain as Supreme Court defers verdict on loan moratorium case to October 5</a> <a href="https://www.businessinsider.in/tech/apps/news/free-calls-on-google-meets-will-be-limited-to-60-minutes-starting-september-30/articleshow/78360190.cms">Free calls on Google Meets will be limited to 60 minutes starting September 30</a> <a href="https://www.businessinsider.in/finance/banks/news/supreme-court-inclined-to-excuse-moratorium-interest-on-interest-as-it-gives-the-government-another-two-weeks-to-file-detailed-affidavit/articleshow/78033878.cms">Loan moratorium — Supreme Court gives government till Thursday to file affidavit, next hearing scheduled for October 5</a>

RBI postpones Monetary Policy meeting as the hunt for three new MPC members continues

Monetary Policy Committee (MPC) has been instituted by the Central Government of India under Section 45ZB of the RBI Act that was amended in 1934. MPC had its first meeting for two days on October 3 and October 4, 2016. The MPC is entrusted with the responsibility of deciding the different policy rates including MSF, Repo Rate, Reverse Repo Rate, and Liquidity Adjustment Facility. Monetary Policy Committee (MPC) has six members and the main objective of this body is to maintain the price stability and boosting up the growth rate of the country’s economy. What is <keyword id="679958" type="ORGANIZATION" weightage="20" keywordseo="RBI-monetary-policy">RBI Monetary Policy</keyword> ? The term ‘Monetary Policy’ is the Reserve Bank of India’s policy pertaining to the deployment of monetary resources under its control for the purpose of achieving GDP growth and lowering the inflation rate. The Reserve Bank of India Act 1934 empowers the RBI to make the monetary policy. We can say that the monetary policy stands for the control measures adopted by the Central Bank of a nation. What the Monetary Policy intends to achieve? As per the suggestions made by Chakravarty Committee, aspects such as price stability, economic growth, equity, social justice, and encouraging the growth of new financial enterprises are some crucial roles connected to the monetary policy of India. While the Government of India tries to accelerate the GDP growth rate of India, the RBI keeps trying to bring down the rate of inflation within a sustainable limit. In order to achieve its main objectives, the Monetary Policy Committee determines the ideal policy interest rate that will help achieve the inflation target in front of the country. Monetary Policy Department (MPD) is an important organ of the Reserve Bank of India that assists the Monetary Policy Committee (MPC) in creating the monetary policy. Monetary Policy Committee Structure Monetary Policy Committee has 6 members as follows: <table style="border-width: initial; border-style: none;"> <tbody><tr> <td style="width: 40.25pt; border-width: 1pt; border-style: solid; border-color: windowtext; padding: 0cm 5.4pt;"> SI. No. </td> <td style="width: 94.5pt; border-top: 1pt solid windowtext; border-right: 1pt solid windowtext; border-bottom: 1pt solid windowtext; border-left-width: initial; border-left-style: none; padding: 0cm 5.4pt;"> Designation </td> <td style="width: 175.5pt; border-top: 1pt solid windowtext; border-right: 1pt solid windowtext; border-bottom: 1pt solid windowtext; border-left-width: initial; border-left-style: none; padding: 0cm 5.4pt;"> The office held </td> <td style="width: 157.25pt; border-top: 1pt solid windowtext; border-right: 1pt solid windowtext; border-bottom: 1pt solid windowtext; border-left-width: initial; border-left-style: none; padding: 0cm 5.4pt;"> Who holds the office as on October 2019 </td> </tr> <tr> <td style="width: 40.25pt; border-right: 1pt solid windowtext; border-bottom: 1pt solid windowtext; border-left: 1pt solid windowtext; border-top-width: initial; border-top-style: none; padding: 0cm 5.4pt;"> </td> <td style="width: 94.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Chair Person </td> <td style="width: 175.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Governor of the Reserve Bank of India </td> <td style="width: 157.25pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Shri Shaktikanta Das </td> </tr> <tr> <td style="width: 40.25pt; border-right: 1pt solid windowtext; border-bottom: 1pt solid windowtext; border-left: 1pt solid windowtext; border-top-width: initial; border-top-style: none; padding: 0cm 5.4pt;"> </td> <td style="width: 94.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Member, ex officio </td> <td style="width: 175.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Deputy Governor of the Reserve Bank of India, in charge of Monetary Policy </td> <td style="width: 157.25pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> BP Kanungo </td> </tr> <tr> <td style="width: 40.25pt; border-right: 1pt solid windowtext; border-bottom: 1pt solid windowtext; border-left: 1pt solid windowtext; border-top-width: initial; border-top-style: none; padding: 0cm 5.4pt;"> </td> <td style="width: 94.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Member, ex officio </td> <td style="width: 175.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> An officer of the Reserve Bank of India nominated by the Central Board </td> <td style="width: 157.25pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Dr. Michael Debabrata Patra </td> </tr> <tr> <td style="width: 40.25pt; border-right: 1pt solid windowtext; border-bottom: 1pt solid windowtext; border-left: 1pt solid windowtext; border-top-width: initial; border-top-style: none; padding: 0cm 5.4pt;"> </td> <td style="width: 94.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Member </td> <td style="width: 175.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Professor, Indian Institute of Management, Ahmedabad </td> <td style="width: 157.25pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Dr. Ravindra H. Dholakia </td> </tr> <tr> <td style="width: 40.25pt; border-right: 1pt solid windowtext; border-bottom: 1pt solid windowtext; border-left: 1pt solid windowtext; border-top-width: initial; border-top-style: none; padding: 0cm 5.4pt;"> </td> <td style="width: 94.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Member </td> <td style="width: 175.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Director, Delhi School of Economics </td> <td style="width: 157.25pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Professor Pami Dua </td> </tr> <tr> <td style="width: 40.25pt; border-right: 1pt solid windowtext; border-bottom: 1pt solid windowtext; border-left: 1pt solid windowtext; border-top-width: initial; border-top-style: none; padding: 0cm 5.4pt;"> </td> <td style="width: 94.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Member </td> <td style="width: 175.5pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Professor, Indian Statistical Institute (ISI) </td> <td style="width: 157.25pt; border-top-width: initial; border-style: none solid solid none; border-left-width: initial; border-bottom-width: 1pt; border-bottom-color: windowtext; border-right-width: 1pt; border-right-color: windowtext; padding: 0cm 5.4pt;"> Shri Chetan Ghate </td> </tr> </tbody></table> The ex- Officio members of the committee hold the office for a term of four years or until the next order, whichever happens earlier. Monetary Policy Instruments and how they are managed Monetary policy instruments are of two types namely qualitative instruments and quantitative instruments. The list of quantitative instruments include Open Market Operations, Bank Rate, Repo Rate, Reverse Repo Rate, Cash Reserve Ratio, Statutory Liquidity Ratio, Marginal standing facility and Liquidity Adjustment Facility (LAF). Qualitative Instruments refer to direct action, change in the margin money and moral suasion. The instruments listed above are managed and regulated as per the needs of the country’s economy. These instruments are effectively used in order to ensure the money supply in the economy so that the inflation rate is stabilized to realize economic growth.

Monetary Policy Committee (MPC) Of India: Its Purpose, Structure and Responsibilities

Mumbai, Dec 3 () RBI Governor Shaktikanta Das-headed Monetary Policy Committee (MPC) on Tuesday started its three-day deliberations on the policy review amid high expectations of another round of reduction in the key policy rate to revive the sagging economy.
 If the Reserve Bank of India (RBI) cuts the repo rate on Thursday, it would be the sixth reduction in the short-term lending rate in 2019.
 "The MPC will meet during December 3 to 5, 2019 for the fifth bi-monthly Monetary Policy Statement for 2019-20," a release by the central bank said.
 The resolution of the MPC will be placed on the website of the RBI at 11.45 AM on December 5.
 In five reductions in 2019 so far, the repo rate has been lowered by a total of 135 basis points over concerns that growth momentum is slowing down and also to try to boost liquidity in the financial system.
 The GDP growth slowed sharply to more than six-year low of 4.5 per cent in the July-September, hit by a slump in manufacturing output, which contracted by 1.0 per cent. The pace of GDP growth moderated from 5 per cent in April-June and 7 per cent in the July-September quarter of 2018.
 The RBI may cut interest rates again to support growth, bankers and experts said.
 The fall in GDP growth rate was despite a slew of new fiscal policy measures, including a large reduction in the base corporate tax rate in a bid to boost private sector investment.
 The RBI governor had previously stated that interest rates will be cut until growth revives and this gives confidence that policy rates may be reduced at the end of three-day monetary policy review, a banker, wishing not to be identified, said.
 RBI has cut interest rates on every single occasion the multi-member monetary policy committee has met since Shaktikanta Das took over as the Governor of RBI in last December. NKD MR
MR

RBI MPC starts deliberations on monetary policy

New Delhi, Dec 19 () Soaring onion prices figured prominently in the deliberations of the high-powered rating setting panel of the Reserve Bank as it voted for status quo in interest rates this month, according to the minutes of the MPC meeting released on Thursday.
 Onion prices are ruling high since September and were in the range of Rs 130-140 a kilogram in Delhi on Friday.
 "Headline inflation rose sharply in September and further in October, driven up by a sudden spike in prices of vegetables as kharif crop was damaged due to unseasonal rains in many parts of the country; increase in prices of onion was particularly sharp," RBI Governor Shaktikanta Das said in the Monetary Policy Committee (MPC) meeting while voting for status quo in the key interest rate.
 The six-member MPC, headed by Das, had kept the repo rate unchanged on December 5 despite moderation in economic growth and easing inflation.
 Along with him, all the other five MPC members -- Chetan Ghate, Pami Dua, Ravindra H Dholakia, Michael Debabrata Patra, and Bibhu Prasad Kanungo -- had voted to retain the repo rate at 5.15 per cent.
 Echoing Das, RBI Deputy Governor Kanungo opined that unseasonal rains in October and early November damaged certain crops and disrupted the mandi arrival patterns.
 "As a result, the temporary demand supply imbalance led to price pressures in several vegetables, especially onion prices," he said, as per the minutes.
 Governor Das further said overall, several uncertainties cloud the growth-inflation outlook.
 "First, the surge in food inflation in last three months, driven up by a spike in onion and other vegetable prices, could be transitory. It is likely to reverse gradually as late kharif output comes to the market," he said.
 In view of this, even as the current food price spike driven by vegetables can be looked through, there is a need for greater clarity as to how the overall food inflation path is going to evolve as there is some uncertainty about the outlook of prices of certain non-vegetable food items such as cereals, pulses, milk and sugar, Das said.
 It is also not clear at this stage as to how the recent increase in telecom charges will play out, even as CPI (retail) inflation excluding food and fuel has moderated, he said.
 Onion prices have risen by 81 per cent in the last one month and are ruling above the Rs 100 per kg mark for the third week in a row in most cities, as government efforts to cool the rates seem to be taking more time than expected.
 Onion prices have shot up as domestic production in kharif and late-kharif seasons (summer-sown) is estimated to have declined by 22 per cent.
 The government has been maintaining that it has taken all possible steps to rein in prices such as allowing imports, imposing a ban on exports and putting restrictions on the quantity of onion which can be stocked by retailers and wholesalers. NKD CS ABM
ABM

High onion prices figured prominently in RBI MPC meeting, minutes show

<ul><li>India’s <keyword id="6366153" type="UNKNOWN" weightage="20" keywordseo="defence-minister">Defence Minister</keyword> <keyword id="6355121" type="UNKNOWN" weightage="20" keywordseo="Rajnath-Singh">Rajnath Singh</keyword> released India’s <keyword id="10014957" type="UNKNOWN" weightage="20" keywordseo="new-defence-acquisition">new Defence Acquisition</keyword> Procedure 2020 today afternoon in the national capital, New Delhi. </li><li>It will be applicable starting October 1.</li><li>The policy has special incentives for products designed and developed by Indian vendors. </li><li>It also has a new manufacturing category that will encourage foreign vendors to set up manufacturing facilities in India, according to Singh. </li></ul>As tensions between India and China continue to simmer along the Line of Actual Control (LAC) in Ladakh, Indian Defence Minister Rajnath Singh unveiled the country’s new Defence Acquisition Procedure (DAP). The policy will be applicable starting October 1. <div type="twitter" handle="DefenceMinIndia" handlename="रक्षा मंत्री कार्यालय/ RMO India" image="http://pbs.twimg.com/profile_images/1134784282080079873/EviwavFk_normal.jpg" favoritecount="835" retweetcount="124" status="Raksha Mantri Shri @rajnathsingh released the New Defence Acquisition Procedure (DAP) at the Defence Acquisition Co… https://t.co/K2PolgHJdK" createdat="1601283481000" id="1310504020432138240"></div> “The <keyword id="10015258" type="UNKNOWN" weightage="20" keywordseo="dap-2020">DAP 2020</keyword> has adequately included provisions to encourage FDI to establish manufacturing hubs both for import substitution and exports while protecting the interests of Indian domestic industry,” said Singh. The policy contains special incentives for Indian designed and developed products, promotes the use of offsets for exports, and has introduced a new category that will encourage foreign vendors to set up manufacturing facilities in India, according to him. The DAP 2020 will eventually replace the existing Defence Procurement Procedure (DPP) 2016. As compared to the previous draft, a new procurement category has been introduced dubbed Buy (Global) - Manufacture in India. “The new category incorporates manufacture of either the entire/part of the equipment or spares/assemblies/subassemblies/Maintenance, Repair and Overhaul (MRO) facility for the equipment, through its subsidiary in India,” the Ministry of Defence (<a href="https://pib.gov.in/PressReleasePage.aspx?PRID=1659746">MoD</a>) described in a statement. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Category </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">DPPP 2016 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">DAP 2020 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Buy (Indian-IDDM) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Min 40% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Min 50% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Buy (Indian) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Min 40% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Indigenous design – Min 50% Otherwise – Min 60% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Buy and Make (Indian) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Min 50% of Make </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Min 50% of Make </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Buy (Global) — Manufacture in India </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">NA </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Min 50% of Buy plus Make </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Buy (Global) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">NA </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Min 30% for Indian vendors </td></tr></tbody></table>*IDDM = Indian designed, developed and manufactured Source: Press Information Bureau The ‘offset’ guidelines have been revised to give preference to manufacturers of complete defence products over components, according to him. Various multipliers have been added to incentivise discharge of offsets. Here are some other big changes that will come into effect starting October 1 as the DAP 2020 comes into effect: <ul><li>Time-bound defence procurement process and faster decision making: A Project Management Unit (PMU) has been mandated to support contract management. It will facilitate obtaining advisory and consultancy support in specified areas to streamline the acquisition process. </li><li>Request For Information (RFI): RFI stage will explore the willingness of the prospective foreign vendors to progressively undertake [the] manufacture and set up an indigenous ecosystem at the spares/sub-component level.</li><li>Co-production through Intergovernmental Agreements (IGAs): This enables the establishment of co-production facilities through IGA achieving import substitution and reducing life cycle cost.</li><li>Simplification of Trial Procedures: Emphasis on the need to conduct trials to nurture competition based on the principles of transparency, fairness, and equal opportunities to all and not as a process of elimination.</li><li>A separate dedicated chapter has been incorporated in the DAP 2020 for the acquisition of systems designed and developed by DRDO/DPSUs/OFB: A simplified procedure with Integrated Single Stage Trials to reduce timelines and lay greater emphasis on evaluation through certification and simulation. </li></ul> India’s three service chiefs, General MM Naravane, Admiral Karambir Singh and Air Chief Marshal RKS Bhaduria, along with Chief of Defence Staff (CDS) Bipin Rawat, were present at the event. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/rbi-postpones-monetary-policy-meeting-new-dates-to-be-announced-soon/articleshow/78361698.cms">RBI postpones Monetary Policy meeting as the hunt for three new MPC members continues</a> <a href="https://www.businessinsider.in/finance/banks/news/sbi-warns-customers-to-beware-of-whatsapp-calls-and-scam-messages/articleshow/78361332.cms">SBI warns customers to beware of WhatsApp calls and scam messages</a> <a href="https://www.businessinsider.in/finance/banks/news/banks-stocks-hdfc-icici-sbi-kotak-mahindra-indusind-react-to-sc-verdict-on-moratorium/articleshow/78358550.cms">Bank stocks gain as Supreme Court defers verdict on loan moratorium case to October 5</a>

Rajnath Singh releases India's new Defence Acquisition Procedure amid India-China border dispute

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">ReutersFormer Bank of England Monetary Policy Committee member Andrew Sentance in 2010.</div></div></div>Andrew Sentance, a former member of Bank of England's Monetary Policy Committee, hit out at a new BoE policy to publish the minutes from <a href="http://uk.businessinsider.com/uk-interest-rates-to-rise-soon-as-boe-members-split-over-decision-2015-8">its interest rate setting meeting on the same day as it announces its decision</a>.He told the BBC's Radio 4 "<a href="http://www.bbc.co.uk/programmes/b0070lr5/episodes/downloads">Wake Up Money</a>" show this morning that the "rushed out" minutes will create an "information overload" as the public will receive the decision, minutes, and the Quarterly Inflation Report all on the same day.This is why today is dubbed "Super Thursday."He added that since the meeting and decision is now conducted the day before the decision is announced, this will create a great "security risk" because there is a chance that it could be leaked.The BoE previously waited two weeks before publishing the minutes from its meeting about how it came to the final decision to whether to move or keep interest rates unchanged. It also includes how and which way members voted. However, it changed its policy to publish the minutes as well as its decision to the same day.The change in policy was intended to be "more transparent," said BoE governor Mark Carney earlier this year.This now means that BoE members only have 18 hours from the when the meeting took place, a Wednesday, to write up the notes, redraft and edit and get it ready for release on a Thursday. Previously, "there used to be two rounds of drafts and members of the MPC would then comment and then meet to agree the final version of the minutes," said Sentance.Sentance, who is now a senior economic advisor for accountancy firm PwC, said this could lead to minutes that are "not as informative" as they used to be.The BoE is set to reveal that <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> interest rates will remain unchanged at a record of low of 0.5% at 12.00 p.m. BST. Rates have stayed this way since March 2009.However, Sentance said that it's likely that "<a href="http://www.bbc.co.uk/programmes/b0070lr5/episodes/downloads">two or three members of the committee</a>" voted for rise in rates. He added that he thinks rates will rise this year. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/ferrari-california-t-specs-facts-video-drive-2015-7">The cheapest new Ferrari money can buy is absolutely gorgeous</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="JleHMzdjpIcJpld5dfaVynKzlNb_4V_q" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

This ex-Bank of England member says 'Super Thursday' is a terrible idea

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="http://www.businessinsider.com/watch-spacex-launch-livestream-2015-4">SpaceX/Flickr</a></div></div></div>Britain is on the cusp of a rise in interest rates because the economy has significantly recovered since rates were slashed to record lows of 0.5% in March 2009.Now, a second member of the Bank of England's rate setting panel - the Monetary Policy Committee - has come out this week to warn that interest rates will rise "pretty soon."He added that when rates start to rise, they will eventually rest around a "new normal" of 2.5% to 3%."I don't think it's anything to worry about, it's a sign of health," <a href="http://www.bbc.co.uk/programmes/b06764cv">said Professor David Miles on BBC's Newsnight programme</a>. "Within the <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> economy consumer confidence is strong, corporate confidence is pretty strong and the financial system is operating near normal now."However, he didn't say a month or year for when rates are likely to rise. He said that a hike would depend on economic data.Low interest rates stimulates the economy because it reduces the cost of borrowing. In other words, it helps those in debt to make repayments and boosts the amount of money in people's pockets. This was necessary when the economy was being hit by the credit crisis on 2007/2008.However, the UK economy has expanded since then and latest data from the Office for National Statistics shows that the UK economy was 2.6% larger in the second quarter (April to June) in 2015, compared to the same quarter a year ago. <a href="http://uk.businessinsider.com/why-britain-is-living-through-the-best-era-ever-uk-economy-jobs-housing-2015-8">It also revised up its forecasts for the expansion of the British economy this year</a>. For this reason, another member of the MPC, Kristin Forbes, <a href="http://uk.businessinsider.com/boe-kristin-forbes-on-uk-interest-rate-hike-2015-8#ixzz3jEtWp0e2">warned that the central bank must hike rates soon</a> or face damaging the progress Britain has made over the last few years."An increase in interest rates is generally believed to take somewhere from one to two years to have its maximum impact. Maintaining interest rates at the current low levels during an expansion risks creating distortions," said <a href="http://www.telegraph.co.uk/finance/bank-of-england/11803024/Kristin-Forbes-Avoiding-sunburn-and-other-considerations-for-interest-rates.html">Forbes, a member of the 9-strong rate setting Monetary Policy Committee, in a column for the Telegraph newspaper</a>."Therefore, interest rates will need to be increased well before inflation hits our 2% target. Waiting too long would risk undermining the recovery - especially if interest rates then need to be increased faster than the gradual path which we expect. But with inflation starting from about zero today, there is no need to act before we are confident that inflation is heading back toward 2% within about two years as expected."At the beginning of August, <a href="http://uk.businessinsider.com/bank-of-england-boe-ben-broadbent-on-uk-interest-rate-rise-date-2015-8">only one member</a> of the MPC <a href="http://uk.businessinsider.com/super-thursday-bank-of-england-leaves-rates-unchanged-2015-8#ixzz3i6Sbrvus">voted to increase interest rates to 0.75%</a>. The remaining eight members of the MPC voted to hold the BoE's benchmark interest rate at 0.5%. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/facts-about-greek-economy-bailout-euro-crisis-2015-6">6 mind-blowing facts about Greece's economy</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="JueTR5dTo3QyUhdNPH4LuPBLRuUjzGwo" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

Britain's interest rates will rocket to a "new normal" of 3%

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

New Delhi, The rupee appreciated 2 paise to 83.35 against the US dollar in early trade on Wednesday, amid a bullish trend in domestic equities and sustained foreign fund inflows. Forex traders said investors remained on the sidelines ahead of the <keyword id="6354335" type="General" weightage="80" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword>'s monetary policy decision later this week. At the interbank foreign exchange, the rupee opened 2 paise higher at 83.35 against the dollar as domestic benchmark indices touched new lifetime peaks. On Tuesday, the rupee settled at 83.37 against the dollar. "The RBI's policy, commencing on Tuesday with a decision due on Friday, will be closely monitored," CR Forex Advisors MD Amit Pabari said. The Reserve Bank is likely to maintain the status quo on the short-term interest rate in its monetary policy review. RBI Governor Shaktikanta Das-headed <keyword id="6375120" type="General" weightage="80" keywordseo="monetary-policy-committee" source="Orion">Monetary Policy Committee</keyword> (MPC) is scheduled to begin its three-day deliberations on December 6. Das would unveil the decision of the six-member MPC on December 8. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.11 per cent lower at 103.93. Brent crude futures, the global oil benchmark, advanced 0.12 per cent to USD 77.29 per barrel. In the domestic equity market, the 30-share BSE Sensex was trading 269.23 points or 0.39 per cent higher at 69,565.25 points. The broader <keyword id="372424" type="General" weightage="80" keywordseo="nse-nifty" source="Orion">NSE Nifty</keyword> jumped 79.50 points or 0.38 per cent to 20,934.60 points. Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday as they purchased shares worth Rs 5,223.51 crore, according to exchange data.

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