RBI monetary policy updates: Central bank has many other tools to revive growth, not just interest rates, says Shaktikanta Das

'RBI's accomodative stance will help ease credit flow'

RBI expectedly held the policy rates even as it raised the near term inflation forecast to 6.5 percent, said Ravikant Bhat, Analyst - BFSI & Insurance, IndiaNivesh.

However, noting improved arrivals of Kharif and Rabi harvests and easing household inflation expectations, the inflation is forecast to ease to 3.2 percent by Q3FY21E, he said.

The accommodative stance of the policy along with multiple supportive measures for MSMEs, NBFCs and banks are stepping in the right direction which will help ease credit flow, help banks manage stress and soften loan pricing, Bhat said.

'Reduced CRR requirement for incremental retail loans positive step'
 

Along expected lines, MPC unanimously decided to maintain status quo on the policy rate but remain accommodative, as long as necessary, to revive growth, said Amar Ambani, Senior President and Head of Research – Institutional Equities, YES Securities.

"Reduced CRR requirement for incremental retail loans was a positive step. With inflation expected to remain elevated in the coming months, we see a long pause on Repo rates," he said.

"However, we expect the RBI to continue to act with other monetary tools like OMOs and Operation Twist. RBI and the government will likely take steps to improve transmission of rates in the economy. We see headline inflation coming off significantly in H2 FY21, with favorable base effect kicking in and fuel and food prices decelerating,"  Ambani said.

"RBI will be in a position to cut rates again after a long pause, in our opinion. We’re yet to work out extent of cuts, but a 25 basis points should come through at the very least,” he said.

'Law to strengthen cooperative banks good step'

RBI deputy governor MK Jain says that the law to strengthen cooperative banks will help the Reserve Bank regulate and supervise cooperative banks more effectively. 

'Repo rate status quo will help control inflationary expectations'
 

The RBI’s move to keep policy rate and monetary stance unchanged will help in controlling inflationary expectations and providing support to growth, said Arun Singh, Chief Economist, Dun and Bradstreet India.

The sharp rise in the inflation rate has constrained monetary policy rate cut. Now, RBI’s focus has to be on the monetary policy transmission in credit market as the full benefit of rate cut has not been passed to consumer yet, he said.

Lower lending rate will provide some respite to investment rate and growth going forward. The surging inflation and slowing growth are raising serious concerns about the future growth prospects of the economy, Singh said.

'Govt spending provides counter-cyclical support to growth'

'Deposit insurance cover hike may not affect banks'

Deposit insurance increase may not have a major impact on bank balance sheets, says RBI deputy governor BP Kanungo.

'RBI stays put with consumer confidence and growth in mind'

The real estate sector has been in particular benefitting from rate cuts which were transmitted to some extent through mortgage rates and repo linked loans to end consumers, said Ramesh Nair CEO & Country Head, JLL India. This was reflected in the 6 percent y-o-y growth in residential sales in 2019.

Moreover, the recently announced extension of benefits to both developers and homebuyers for affordable housing in the Union Budget is expected to maintain the growth momentum in the sector, he said.

The RBI’s move today to ease rules for projects delayed for reasons beyond the control of promoters by one year will provide the much-needed elbow room for developers.

The repo rate breached the 10-year low mark in October 2019 at 5.15 percent. The past trends indicate that further rate cuts would have been ineffective in reviving growth.

The revival of economic growth depends on the balance between fiscal and monetary policies which weigh on the consumer sentiment.

'Operation Twist brought in for more monetary policy transmission'

Operation Twist is a mechanism used to bring more monetary policy transmission, says RBI governor Shaktikanta Das.

Long-term repo action will not replace open market operations: RBI dy governor

Long-term repo actions will not replace open market operations, says RBI deputy governor Michael Patra.

He added that this is intended to bring down the cost of funds for banks.  Liquidity management is operating procedure of monetary policy, he said.

14-day term repos every fortnight withdrawan: RBI

'Self-regulatory organisation for digital payment system by April 2020' 

RBI governor Shaktikanta Das said that the Reserve Bank will put in place a framework for establishing a self regulatory organisation for the digital payment system by April 2020 with a view to fostering best practices on security, customer protection and pricing, among others.

CPI inflation likely to remain in comfort zone next fiscal: RBI
 

The RBI MPC considers CPI inflation for its monetary policy actions and inflation is expected to be within the comfort zone of the MPC in the next fiscal.

However, fiscal deficit has not only breached the target but is budgeted at 3.5 percent for 2020-21, including the reported off-budget liabilities, it works out to 4.3 percent. 

'RBI monetary policy complements Budget 2020'

RBI has kept the repo rate unchanged at 5.15 percent, while continuing the basic accommodative stance of the policy in response to the objective of revival of growth, said Joseph Thomas, Head of Research, Emkay Wealth Management.

The Budget is out, and there is lot of clarity about the government finances, the RBI has crafted a fine balancing act of reconciling the requirements of growth with stability, he said.

Investment outlook showing signs of improvement, says RBI governor

RBI to conduct term repos from 15 February
 

RBI governor Shaktikanta Das says that from the fortnight beginning on 15 February 2020, the RBI will conduct term repos of one-year and three-year tenors of appropriate sizes for up to a total amount of Rs 1 lakh crore at the policy repo rate.

Forex reserves jump: RBI governor

Forex reserves jump to $471.8 billion as of Feb 5, up over 58% YoY. 

The RBI governor says monetary policy transmission remains seizable so far.

RBI revises upwards retail inflation projection to 6.5% for Q3
 

The Reserve Bank of India on Thursday revised upwards its retail inflation projection for the last quarter of the current fiscal to 6.5 percent owing to likely increase in input costs for milk and pulses amid volatile crude oil prices.

Going forward, the inflation outlook is likely to be influenced by several factors like food inflation, crude prices and input costs for services, RBI said.

RBI estimates GDP to expand at 6% in FY21

The Reserve Bank of India on Thursday projected the economy to expand by 6 percent during the next financial year, pegging it at the lower end of the GDP growth estimate of the Economic Survey.

The survey, tabled in Parliament last month, estimated the GDP growth during FY21 at 6-6.5 percent.

Transmissions of rates has improved: Shaktikanta Das
 

Transmission of rates has improved, says RBI governor Shaktikanta Das.

Das said that the CPI inflation projection is revised upwards to 6.5 percent for Q4FY20; 5.4-5.0 percent for H1FY21; and 3.2 percent for Q3FY21, with risks broadly balanced.

RBI's next meeting will be on 31 March
 

The next meeting of the MPC is scheduled during 31 March, 1, 3 April, 2020.

The RBI MPC's next meeting is scheduled between February and October 2019, the RBI had reduced repo rate by 135 basis points.

Policy transmission to credit markets improving: Shaktikanta Das

Measures taken to boost rural economy: RBI governor

Budget 2020 has taken several measures to boost the rural economy and revive growth, says RBI governor Shaktikanta Das.

'Excluding onions, food inflation would have been lower by 4.7 percentage points'
 

Excluding onions, food inflation would have been lower by 4.7 percentage points and headline inflation by 2.1 percentage points in December, said RBI governor Shaktikanta Das.

Das said that inflation in several other food sub-groups such as milk, pulses, cereals, edible oils, eggs, meat and fish also firmed up.

Spike in onion prices will impact inflation outlook: RBI

Going forward, the inflation outlook is likely to be influenced by several factors, the RBI said.

First, food inflation is likely to soften from the high levels of December and the decline is expected to become more pronounced during Q4:2019-20 as onion prices fall rapidly in response to arrivals of late kharif and rabi harvests, RBI said.

Economic activity remains subdued: MPC

The central bank retained GDP growth at 5 percent for 2019-20 and pegged it at 6 percent for the next fiscal.

Economic activity remains subdued and the few indicators that have moved up recently are yet to gain traction in a more broad-based manner. Given the evolving growth-inflation dynamics, the MPC felt it appropriate to maintain status quo, the MPC said.
 

Banks will now be incentivised to lend more to MSMEs: Keki Mistry

The steps taken by RBI will boost GDP growth. Bank will now be incetivised to lend more to MSMES. The issue of lack of funding to stuck projects has not been addressed, said Keki Mistry, CEO of HDFC.

Sensex surges 200 points, Nifty nears 12,150-mark

S&P BSE Sensex was trading over 200 points higher at 41,367 points, while the broader Nifty50 index was ruling at 12,141, up 53 points.

Shares of housing finance companies surged higher after the RBI said that 'no downgrade of commercial realty loan if delay genuine'.

RBI governor Shaktikanta Das speaks to media

RBI has several instruments to address challenges: Shaktikanta Das

The central bank has several instruments in its command and addresses the various challenges the Indian economy faces and the sluggishness. There are other ways RBI can address the challenges

'RBI MPC assessed current macroeconomic conditions'

Steps will be taken at opportune matter of various monetary policy actions, says Shaktikanta Das.

RBI MPC assessed current macroeconomic conditions, the RBI governor said. 

RBI governor Shaktikanta Das addresses media

RBI keeps rate unchanged second time

This is the second consecutive pause by the RBI after it reduced policy rates by 135 basis points in five back-to-back reviews last year.

RBI to periodically publish Digital payments index

As part of the developmental and regulatory policies, RBI has said that it will periodically publish a composite “Digital Payments Index” (DPI) to capture the extent of digitisation of payments effectively.

Private consumption in rural areas may recover on better rabi season: RBI 

Inflation to remain elevated in short-term: RBI

RBI anticipates inflation to remain elevated in short-run; overall, inflation outlook remains highly uncertain.  RBI pegs GDP growth for 2020-21 at 6 percent.

Higher fiscal deficit has not resulted in higher market borrowings: MPC

MPC said that the higher fiscal deficit in 2019-20 has not resulted in an increase in market borrowings compared to the budget estimates.

The fiscal deficit is budgeted to decline to 3.5 percent of GDP for 2020-21, it said.

'Repo rate unchanged keeping in mind inflation' 

Kaushal Agarwal,  Chairman, The Guardians Real Estate Advisory, said the announcement is on expected lines, keeping in mind the inflation and the key policy rate reduction of 135 basis points, that was announced across last year.

The banks should, now, be pushed to pass on the benefits of the previous rate cuts that were announced by RBI. The same is imperative to bring down the borrowing cost for the home buyer and provide impetus to demand generation across the category, he said.

 Coronavirus may impact tourist arrivals, global trade: RBI

All MPC members vote in favour of status quo

All MPC members including Chetan Ghate, Pami Dua, Ravindra Dholakia, Janak Raj, Michael Debabrata Patra and RBI governor Shaktikanta Das voted in favour of the status quo decision. 

Inflation above upper limit: MPC

The MPC notes that inflation has surged above the upper tolerance band around the target in December 2019, primarily on the back of the unusual spike in onion prices. Over the coming weeks and months, it said that onion prices are likely to ebb as supply conditions improve. 

RBI to continue with the accommodative stance

With status quo on repo rate, the MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.

RBI keeps rates unchanged

MPC of Reserve Bank of India keeps the repo rate unchanged at 5.15 percent.

Sensex jumps over 100 points in opening session

Sensex jumped over 100 points in the opening session on Thursday ahead of the outcome of Reserve Bank of India's monetary policy review amid strong cues from global markets.

The 30-share BSE index was trading 125.32 points or 0.30 percent higher at 41,267.98, and the broader NSE advanced 46.20 points, or 0.38 percent, to 12,135.35.

MPC will have a tough time, say experts

Experts said the MPC members are going to have a tough time as slowing economy makes the case for reduction in repo rate, while rising inflation and higher fiscal deficit will require the central bank to either hike the rate or maintain a status quo.

The government has estimated India's gross domestic product (GDP) at 5 percent in the current financial year owing to both domestic as well as global factors amid weakening consumption demand in the country.