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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

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="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> announced the decision of the newly formed six-member MPC (<keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword>) today, following the conclusion of the three-day meeting, which began on October 7, 2024. Treading along expected lines, RBI rate-setting panel left the repo rate unchanged at 6.5% for the 10th consecutive time, in its 51st meeting today. The decision was made by a majority, with 5 out of 6 members voting for leaving the rate unchanged. This is the fourth bi-monthly monetary policy review for FY25, and the first since three external members were appointed to the panel earlier this month. The tenure of the previous three members had come to an end on October 4, 2024. While the outgoing members include Ashima Goyal (emeritus professor, Indira Gandhi Institute of Development Research), Shashanka Bhide (honorary senior advisor, National Council of Applied Economic Research); and Jayanth R. Varma(professor, Indian Institute of Management, Ahmedabad), the income members are Ram Singh (Director, Delhi School of Economics), Saugata Bhattacharya, an economist; and Nagesh Kumar (Director and chief executive, Institute for Studies in Industrial Development). <h2>Wait and Watch </h2>RBI also changed its policy stance to neutral, while remaining committed to growth and bringing down inflation to its target of 4%. This means that at present, the bank is not inclined to either increase or decrease the interest rates, but will take a call depending on macroeconomic conditions and prevailing factors. "Taking all these factors into consideration, the real GDP growth for 2024-25 is projected at 7.2%, with Q2 at 7%, Q3 at 7.4% and Q4 at 7.4%", he said. As for inflation, Das highlighted that headline inflation had softened significantly in July and August and even food inflation experienced a certain degree of correction during these two months. Keeping this in mind, CPI inflation for 2024-25 i.e. current year is projected at 4.5%, with Q2 at 4.1%, Q3 at 4.8% and Q4 at 4.2%. CPI for first quarter of next financial year i.e. 2025-26 is estimated at 4.3%. "It's with a lot of effort that inflation horse has been brought to the stable, i.e. closer to the target and within the tolerance span, compared to its place or heightened levels two years ago. We have to be very careful about opening the gate, as the horse may simply hold again. We must keep the horse in tight leash, so that we do not lose control", Das added. Most economists had anticipated a change in the central bank's current policy stance of 'withdrawal of accommodation'. This policy stand indicates that any interest rate cuts are presently off the table. However, given the ongoing geopolitical crisis and Fed's jumbo rate cut by 50-basis points last month, RBI may bring about a cut in interest rates, sooner than later. However, since food inflation remains high at 5.42% as of July 2024, experts had also estimated that now might not have been a good time for RBI to bring down interest rates. Moreover, PMI (purchase managers index) indices, which help in gauging the health of manufacturing and service sectors in the country, presently stand at a multi-month low, and even the core sector output is witnessing a contraction after 42 straight months. As Suman Chowdhury, Executive Director &amp; Chief Economist, Acuité Ratings &amp; Research had highlighted, the current circumstances are not really conducive for RBI to opt for any affirmation action towards an easier monetary policy. "While the fear of the inflation “elephant” may have subsided with the CPI headline print well within 4.0% over the last two months and a favorable monsoon, the concerns around the stability of food inflation still linger among policy makers. The RBI may wait till December 2024 or February 2025 to make a rat cut, he continued. <h2>Housing sector rejoices</h2>From the point of view of homebuyers, the relatively affordable home loan interest rate regime will continue at a critical time for the Indian housing market - the festive season - amid rising housing prices and tapered sales. Q3 2024 saw average housing prices rise by a cumulative 23% in the top 7 cities even as average prices in these markets collectively rose to approximately Rs 8,390 per sq. ft. by Q3 2024-end, from Rs 6,800 per sq. ft. in Q3 2023. "The unchanged home loan rates are much-needed demand support in the ongoing festive quarter. We are expecting faster sales momentum in Q4 2024 when compared to the preceding quarter. This year's festive quarter may see similar demand to that seen in this period a year ago, if not higher. Over 1.27 lakh units were sold across the top 7 cities back in Q4 2023. Unchanged interest rates will play and important role in achieving and maintaining this momentum", says Anuj Puri, Chairman - ANAROCK Group

RBIs MPC meet concludes today: Repo rate left unchanged at 6.5%

<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

The Reserve Bank is unlikely to ease the benchmark policy rate from 6.5% during 2024, given the persisting uncertainty over <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">food inflation</keyword>, State Bank of India (<keyword id="19898108" type="General" weightage="20" keywordseo="SBI" source="keywords">SBI</keyword>) chairman C S Setty has recently said. The US Federal Reserve's first cut in <keyword id="20071327" type="General" weightage="20" keywordseo="interest-rate" source="keywords">interest rate</keyword>s in more than four years happened today, triggering central banks in other economies to follow suit. The Fed trimmed the interest rates by 50 basis point trim to its target interest rate range to 4.75-5%. "On the rate front, a lot of central banks are taking independent calls. While Fed rate cut would influence everyone, <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> would be mindful of the food inflation before taking a call on interest rate cut," Setty, who recently took over the reins of the bank, was noted as saying. "Our view is also that the rate cut during the current calendar year may not happen. Probably, we may have to wait for Q4 (January-March 2025) unless there is a good improvement in terms of food inflation," he added. Notably, RBIs <keyword id="19913109" type="General" weightage="100" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (MPC), headed by RBI Governor Shaktikanta Das is scheduled to meet next month, between October 7-9 and take a call on interest rate. The committee will largely take <keyword id="19999652" type="General" weightage="20" keywordseo="retail-inflation" source="keywords">retail inflation</keyword>, which inched to 3.65% in August, up from 3.54% in July, into account for making rate-related decisions On the other hand, India's wholesale price index (WPI) eased to 1.31% on an annual basis, which is also a 4-month low, down from 2.04% in July. The data, released recently by the government, also highlighted the stickiness of food price inflation, which stood largely undeterred at 3.11% in August, as compared to 3.45% in July. Although WPI rates do not directly impact RBIs decision making, it does affect the retail inflation rates, although it takes time to reflect the same. Says Rahul Agrawal, Senior Economist at ICRA Ltd, “The <keyword id="20198768" type="General" weightage="20" keywordseo="WPI-inflation" source="keywords">WPI inflation</keyword> eased to a four-month low in August 2024, with the fuel and power, core (non-food manufacturing), and crude petroleum and natural gas sub-groups together pulling down the headline WPI print by as much as 70 bps in the month vis-à-vis July 2024. The core WPI inflation dipped to 0.7% in August 2024 from 1.2% in July 2024, amidst a continued softening in global commodity prices. "While prices of most food items have eased further on a month-on-month basis in September 2024, an adverse base would push up the YoY inflation prints for the primary food articles category significantly in the ongoing month, exerting upward pressure to the headline WPI inflation print for September 2024", said Agrawal. The price of the Indian basket of crude oil has averaged 6.0% lower in September 2024 on a sequential basis, touching the lowest levels in 33 months, which would also help contain the uptick in the headline WPI inflation print in the month. We anticipate WPI to touch the 2.0% in September 2024 from 1.3% in August 2024", he continued. Amongst the food articles whose prices dipped during the month were cereals (8.44%), paddy (9.12%), pulses (18.57%) and onions (65.75%), it did little to tame inflation, which continued to stay put in double digits. On the other hand, prices of potato (77.96%) and fruits (16.7%) inched up. The dip in WPI was largely led by slowdown in prices of manufactured food products (3.61%), beverages (1.9%), pharmaceuticals (1.97%) and petrol (4.23%). "While there may not be a one-to-one correspondence between the WPI and the CPI data because of the items, size, number, and relative weights assigned, the CPI data will also down-trend in sync with the RBI’s medium-term target of 4 % for the second time in nearly five years. However high food prices will induce the RBI to be wary", notes Manoranjan Sharma, Chief Economist, Infomerics Ratings.

RBI unlikely to cut interest rate in 2024, food inflation to be deciding factor, says SBI chief Setty

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="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) <keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (MPC) has decided to keep the <keyword id="20094323" type="General" weightage="100" keywordseo="repo-rate" source="keywords">repo rate</keyword> steady at 6.5%. This decision, announced by RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="keywords">Shaktikanta Das</keyword> early today, marks the ninth consecutive time the central bank has maintained the current rate, which was last adjusted in February 2023. The MPC's decision was made by a majority vote of 4:2, reflecting a cautious approach to balance economic growth and <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> control. But what exactly is repo rate and how does it impact you? Read on as we explain. <h2>Understanding the Repo Rate</h2>The repo rate, or repurchase agreement rate, is a critical monetary policy tool used by the RBI. It is the rate at which the central bank lends money to commercial banks and financial institutions against government securities. By adjusting the repo rate, the RBI influences the money supply, which in turn affects inflation and economic activity. <h2>How does it impact you?</h2>Changes in the repo rate have significant implications for both borrowers and savers. When the repo rate increases, banks incur higher costs to borrow funds from the RBI. To maintain their profit margins, these institutions raise interest rates on loans, leading to higher borrowing costs for consumers. Conversely, a lower repo rate reduces borrowing costs, resulting in lower EMIs for various loans, including home, personal, and education loans. Fixed deposit interest rates are also influenced by the repo rate. An increase in the repo rate can lead banks to offer higher interest rates on fixed deposits to attract more funds, benefiting depositors. On the other hand, a decrease in the repo rate might result in lower <keyword id="20772297" type="General" weightage="20" keywordseo="fixed-deposit-rates" source="keywords">fixed deposit rates</keyword>, affecting returns for savers. <h2>Relationship between repo rate and inflation</h2>As the lender of last resort, the RBI provides short-term funds to commercial banks through the repo rate mechanism. By doing so, it influences the interest rates that banks offer to their customers. This ability to control the cost of borrowing is a powerful tool for the RBI to manage economic stability. In times of inflation, the RBI raises the repo rate to curb borrowing and encourage saving. Higher interest rates make loans more expensive, reducing consumer spending and slowing down inflation. Conversely, in a deflationary environment, the RBI lowers the repo rate to stimulate borrowing and spending, thereby boosting economic activity. For example, there's a very popular bakery that everyone loves in a fictional town. This bakery makes the best bread and pastries, and almost everyone in town buys their daily bread from there. During a period of low inflation, the central bank of the town (similar to the Reserve Bank of India) sets a low repo rate, meaning it's cheap for commercial banks to borrow money. As a result, banks borrow money at a low cost and are willing to lend more money to the residents at lower interest rates. The residents find it easy and cheap to get loans, so they have more money to spend. With more disposable income, people in the town buy more bread and pastries. The bakery sees a surge in demand. With everyone having more money to spend, the demand for bread and pastries increases rapidly. The bakery struggles to keep up with the demand and starts raising prices. As the prices of bread and other goods in the town go up, inflation starts to rise. The central bank notices that inflation is getting too high, making everyday goods more expensive for everyone. To control this inflation, the central bank decides to increase the repo rate. During a high inflation period, with the increased repo rate, it's more expensive for commercial banks to borrow money. Consequently, banks in the town start lending less money and at higher interest rates. The residents find it harder and more expensive to get loans, so they have less extra money to spend. With less disposable income, fewer people buy bread and pastries. The demand decreases. With lower demand, the bakery reduces its prices to attract more customers. As the prices of goods in the town start to stabilise or even decrease, inflation comes under control.

RBI keeps repo rate unchanged at 6.5%: What is repo rate and how it affects you

New Delhi: The ongoing volatility in the prices of key food items such as tomatoes, onions, and potatoes (collectively known as TOP) and pulses continues to pose significant challenges for the <keyword id="19913109" type="General" weightage="20" keywordseo="monetary-policy-committee" source="keywords">Monetary Policy Committee</keyword> (MPC) of 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="100" keywordseo="RBI" source="keywords">RBI</keyword>), highlights a report by <keyword id="19898108" type="General" weightage="20" keywordseo="SBI" source="keywords">SBI</keyword>. "Current volatility in prices of TOP and pulses continues to challenge the MPC, keeping the headline above target at 5.1 per cent in June 2024," said the report. The report highlighted that this instability in <keyword id="19960157" type="General" weightage="20" keywordseo="food-prices" source="keywords">food prices</keyword> has kept the headline Consumer Price Index (CPI) <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> above the targeted level, reaching 5.1 per cent in June 2024. While the inflationary pressures remain a concern, the report stated that there is hope on the horizon due to the currently above-normal <keyword id="19968257" type="General" weightage="20" keywordseo="monsoon" source="keywords">monsoon</keyword> and increased sowing activity, which are further supported by the potential onset of a La Nina event later in the year. "The currently above-normal monsoon and sowing, backed up by a potential La Nina event later, promise reprieve in later quarters," said the report. Importantly, the report added that it is now expected that the CPI will remain above the RBI's medium-term target of 4 per cent in all quarters up until the first quarter of FY26. This persistent overshoot highlights the ongoing inflationary pressures in the economy. "Notably, now the CPI is expected to be above RBI's target of 4 per cent in all quarters till Q1FY26," the report added. However, the report noted that the Monetary Policy Committee expects a moderation in inflation during the fourth quarter, which is anticipated to help keep the overall CPI projection for FY24 unchanged at 4.5 per cent. The SBI report also believes that the volatility in food prices, driven by uneven spatial and temporal distribution of monsoon rains, presents an upside risk to the current inflation projections. As a result, SBI maintains its CPI estimate for FY25 at 4.7 per cent year-on-year. In the latest MPC meeting on Wednesday, RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword> said inflation will moderate from July onwards as the monsoon has improved and global food prices have shown signs of easing in July. Das said, "Global food prices showed signs of easing in the month of July after registering an increase since March 2024." A degree of relief in food inflation is expected from the pickup in southwest monsoon and healthy progress in Kharif sowing. Buffer stocks of cereals continue to be above the norms, according to RBI Governor Shaktikanta Das. Das added, "Assuming a normal monsoon and taking into account the 4.9 per cent inflation print, Q1 CPI inflation for the current financial year (2024-25) is projected at 4.5 per cent, with q2 at 4.4 per cent, Q3 at 4.7 per cent and Q4 at 4.3 per cent. CPI inflation for the first quarter of next financial year (Q1 2025-26) is projected at 4.4 per cent."

High food prices raise concerns but improved monsoon offers hope for RBI: SBI report

Days after Trump won his way to the White House, becoming the 47th President of the United States, the US Federal Reserve slashed the interest rates by 25 basis points, bringing them within the range of 4.5-4.75%. This is the second time this year that the Fed has lowered the interest rates, after cutting them down by 50 basis points in September 2024. u Fed chair Jerome Powell noted that monetary policy remains tight as inflation remains elevated at 2.4% as of September 2024, slightly above the 2% mark set by the commission. However, the Fed remained optimistic about the current state of the economy. "The Committee seeks to achieve maximum employment and inflation at 2% over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate," the FOMC (Federal Open Market Committee) noted in its press release. The rate cut was along widely anticipated lines, although experts were wary of the Fed's way ahead, given that Donald Trump has been elected as the US President. In the past, he has, on multiple occasions, expressed his desire to yield greater influence on the Fed, apart from publicly criticizing Powell. However, Powell continued to stand his ground, noting that Trump cannot legally sack him. He believed in keeping the Fed independent, at least until his tenure as governor ends in 2028. He highlighted that even if he is explicitly asked by Trump to quit, he won't do so. <h2>Trump's regime to inch up inflation?</h2> Trump's electoral promises, if translated into policies, could spell disaster for the Fed's effort to curtail inflation. Reportedly, Trump has promised to levy aggressive tariffs against US trading partners, particularly China, and even extend his 2017 tax cuts. This could mean higher levels of the federal deficit, which would push up prices, wages, and hence, inflation, even as the Fed tries to consistently bring it under control. Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities, notes that it wasn't a surprise when the US Fed cut interest rates by 25 basis points (bps) to 4.75%. The Fed had given enough clues, and the market too had anticipated these rate cuts. "However, what was surprising was how the <keyword id="23863852" type="General" weightage="20" keywordseo="US-10-year-bond-yields" source="keywords">US 10-year bond yields</keyword> moved over the last one and a half months, which have been rising relentlessly from 3.6% to almost 4.5% despite the 50 bps cut in the last Fed meeting. It seems that the market is anticipating slower rate cuts going ahead, and maybe there are even chances of inflation rising. The bond yields have cooled off and slipped below the 4.335% mark. This should be bullish for emerging markets like India," he added.

US Fed cuts interest rates by 25 bps, Powell notes Trump's victory to have no impact on policy decisions

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

Economists at the country's largest lender, SBI, today said they see India's Q2 real GDP growth slowing down further to 6.5% in the September quarter of this fiscal year. Amid concerns over the country's economic growth rate and whether it is slowing down, the analysts said they expect FY25 growth to come "closer to" 7%. SBI analysts join a long line of agencies like Fitch, ADB, IMF, Moody, World Bank, S&amp;P, and even RBI in forecasting India's GDP growth for FY25 in the range of 6.8% to 7.2% for FY25, driven by robust consumption and investment. SIP inflows have been at an all-time high, and so has QIP (qualified institutional placement) fundraising. As many as 71 companies raised Rs 88,678 crore this year through QIPs. Activity in Indian primary markets also remained robust, with 78 mainboard IPOs in 2024; this is a 111% rise from just 38 listings in FY23. Between April and June 2024, India's real GDP grew by 6.7%, the lowest growth seen in 15 quarters, pushing experts to believe that India is caught in a cycle of slowdown. "There is some incipient pressure evident on the domestic economy. Based on our analysis of 50 meaningful leading indicators (both consumption and demand-centric), a dip looks plausible across select cohorts of agriculture, industry, and services in Q2," the <keyword id="22337294" type="General" weightage="20" keywordseo="SBI-economists" source="keywords">SBI economists</keyword> added. Stating that they track 50 indicators to gauge economic activity, SBIs note said the proportion of indicators showing acceleration declined to 69% in Q2 FY25, as against 80% in Q2 FY24 and 78% in Q1 FY25. However, things might be changing now, given that rural demand has started looking up amidst muted urban demand. SBI also explained that the ongoing regulatory tightening on unsecured lending and roadblocks that are hindering rollover/refinancing of debt through unsecured credit are dismantling the unwarranted exuberance that had built up post-pandemic, especially in the urban areas. Madhu Lunawat, CIO &amp; Fund Manager, Bharat Value Fund states that the overall investment environment remains strong due to favorable economic conditions supporting government policies &amp; reforms. "The sustainable inflow from domestic investors is going to support the Indian equity market in any kind of correction. The long-term bullish structure of Indian economy will continue to attract new domestic &amp; global investors to participate in India’s growth story through various Investment avenues.” <h2>Rate cuts not on cards</h2>RBI Governor Shaktikanta Das clarified today that changing the monetary policy stance to 'neutral' does not mean a rate cut is imminent in the central bank's next policy announcement. Notably, RBI MPC is set to meet between December 4 and 6, 2024, to decide if the prevailing repo rate of 6.5%, which has stayed unchanged for the last 2 years, should be brought down or not. In its last meeting, The <keyword id="20501100" type="General" weightage="20" keywordseo="RBI-monetary-policy" source="keywords">RBI monetary policy</keyword> committee had shifted its stance to 'neutral' indicating that it is open to adjusting interest rates based on economic conditions. "It should not be assumed that we have done this, so therefore the next step is a rate cut. A change in stance doesn't mean that the next step is a rate cut in the very next meeting. It's not so," Das said. Das also cautioned that inflation remains a key factor, and inflation and CPI prints for October are expected to stay high.

SBI economists see Q2 GDP growth slowing down to 6.5%; FY25 growth to be closer to 7%

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

<keyword id="19951168" type="General" weightage="20" keywordseo="RBI-governor-Shaktikanta-Das" source="keywords">RBI governor Shaktikanta Das</keyword> announced no change in prevailing interest rates and maintained the withdrawal of accommodation stance in the ongoing <keyword id="20456086" type="General" weightage="20" keywordseo="Monetary-Policy-Review" source="keywords">Monetary Policy Review</keyword> (MPC) meeting, which was held between August 6th and August 8th, 2024. This was the 50th MPC meeting since its inception. <h2>What is MPC meet? </h2>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> (RBI) held its third <keyword id="22709762" type="General" weightage="20" keywordseo="bi-monthly-MPC-meet" source="keywords">bi-monthly MPC meet</keyword>, which began on August 6th, 2024 and concluded today. Experts were widely of the view that there would be no significant changes in the <keyword id="22709761" type="General" weightage="20" keywordseo="benchmark-repo-rate" source="keywords">benchmark repo rate</keyword> during this MPC meet, and that the MPC would keep it unchanged at 6.5%. This is the ninth time the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> has been left unchanged, since it was last increased from 6.25% to 6.5% on 8th February 2023. MPC includes 6 members, three from RBI, and three external experts. Together, they are responsible for setting the benchmark interest rate, or repo rate. This is the rate at which the central bank of the country i.e. RBI lends to other banks of the country. If it is increased, the same translates into higher borrowing costs for consumers as well. <h2>What was the decision? </h2>MPC decided, by a majority of 4:2 members, that the repo rate will be left unchanged at 6.5%. This was done to align both market expectations and monetary policies. The MPC has decided to focus on maintaining price stability to ensure growth, and that inflation progressively aligns with the target. Notably, the RBIs inflation target is around 4%, with a tolerance band of about 2%. This target was last met in January 2021, when inflation stood at 4.06%. Per the governor, "PMI services stood strong at 60.3 in July, and have been above 60 for seven constitutive months, indicating robust expansion of services. On the demand side, household consumption is supporting a turnaround in rural demand and steady discretionary spending in urban areas is also being observed". As Das noted, sustained buoyancy in services activity is expected to support urban consumption. Moreover, government's thrust on capex, and signs of pickup in private investment would drive investment activity in the current year. Taking all these factors into consideration, the real GDP growth for 2024-25 has been projected at 7.2% . This is distributed as 7% in Q1, 7.1% in Q2, 7.2% in Q3 and 7.3% in Q4. Explaining the moderation of growth projections for the first quarter of the current FY, as compared to information given during previous MPC in June, Das explained that this was primarily due to updated information on certain high frequency indicators which show lower than anticipated results. These include corporate profitability, central government expenditure and core industries output, among others. As for CPI inflation for current FY, it has been pegged at 4.5%. Accordingly, Q2 projections stand at 4.4%, Q3 at 4.7% and Q4 at 4.3%. CPI inflation for the first quarter of next financial year i.e. Q1FY26 is projected at 4.4%. <h2>Is high food inflation a key concern? </h2>In June 2024, food inflation surged, pushing overall CPI (consumer price index) inflation to 5.1% during the month, from 4.8% in May. It may be noted that food inflation forms a significant part of CPI. That is why, even with a supportive base effect from the previous year, food inflation jumped to 9.4%, driven mostly by high vegetable prices, which have remained in double digits for eight months. "The inflation trajectory has been moderating, and we do expect it to moderate, but the pace of modulation has been uneven and slow. So, we need to be watchful to ensure that we move closer to target, and CPI inflation gets aligned to the target on a durable basis", continued Das. <h2>Some segments of personal loans are excessively leveraged, notes Das </h2> Going ahead, there will be a public repository of digital lending apps deployed by the regulator. This comes amidst a spike in number of unauthorised lending apps, and certain segments of personal loans witnessing excess leverage through retail loans, most of which are for consumption purposes, the governor noted. Additionally, the current UPI transaction limit for tax payments is being enhanced from Rs 1,00,000 to Rs 5,00,000 per transaction. Also, the clearance cycle is also being shortened and made almost continuous, with cheques being cleared on the same day, within just a few hours of being presented, benefiting all stakeholders. <h2>What are the experts saying? </h2>Says Anuj Puri, Chairman - ANAROCK Group, "The RBI's decision to keep repo rates unchanged at 6.5% for ninth consecutive time aligns well with yesterday's announcement on indexation benefits. It sets a positive tone for the housing industry. Maintaining interest rates offers consistency in borrowing costs, which will prompt more aspiring homebuyers to consider taking the plunge - and thus drive demand in the housing market. With interest rates staying steady, EMIs will remain manageable for current and potential homeowners, potentially leading to increased home sales - particularly in the price-sensitive affordable segment". <h2>When is the next MPC scheduled?</h2>The upcoming RBI MPC meets are scheduled to take place between October 7th and 9th, December 4th an 6th, 2024, and February 5th and 7th, 2025.

You Searched For "reserve bank of india s monetary policy committee" and got 12 results

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High food prices raise concerns but improved monsoon offers hope for RBI: SBI report

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US Fed cuts interest rates by 25 bps, Powell notes Trump's victory to have no impact on policy decisions

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

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SBI economists see Q2 GDP growth slowing down to 6.5%; FY25 growth to be closer to 7%

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

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RBI MPC Meet: Repo rates unchanged at 6.5%, inflation moderating, albeit slowly

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