RBI monetary policy updates: We are at the beginning of a currency war, says Governor Urjit Patel

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RBI monetary policy updates: We are at the beginning of a currency war, says Governor Urjit Patel
  • 15:31 (IST)

    Kunal Shah, Senior VP& fund manager, Kotak Mahindra Life Insurance 

    “The tone of policy statement is broadly neutral. I think what they have delivered is somewhat concluding the expected increase in inflation rather than the realised inflation because realised inflation has been running lower than forecast. So, maybe some expectation of MSP (minimum support price)-related increase in inflation, and they want to pre-emptively be cautious and deliver a rate hike, and that is what I think the market is expecting.

    “Inflation continues to remain under control. Even today, the Reserve Bank of India has not revised its inflation forecast... I think even the RBI is comfortable with the projected inflation, but they are not comfortable with the unexpected rise in inflation... so they just gave a pre-emptive hike, otherwise they could have increased their inflation projections, which they have not done.”

    -Reuters

  • 15:28 (IST)

    GDP growth to be in the range of 7.5%-7.6% in first-half of the fiscal: RBI
     
    As per the RBI, the growth would be in the range of 7.5-7.6 per cent in first half of the fiscal and 7.3-7.4 per cent in October-March 2018-19 period "with risks evenly balanced".
     
    The center has also projected the GDP growth for first quarter of the next financial year at 2019-20 at 7.5 per cent.
     
    The monetary policy statement further said that increased FDI flows in recent months and continued buoyant domestic capital market conditions bode well for investment activity.
     
    -PTI

  • 15:24 (IST)

    FMCG companies' earnings reflect buoyant rural demand, says RBI

    "Robust corporate earnings, especially of fast moving consumer goods (FMCG) companies, also reflect buoyant rural demand," the central bank said, adding that investment activity remains firm even as there has been some tightening of financing conditions in the recent period.

    The central bank said that activity in the manufacturing sector is expected to remain robust in Q2, though there may be some moderation in pace.
     
    Rising trade tensions may, however, have an adverse impact on India's exports.
     
    - PTI

  • 15:23 (IST)

    RBI retains GDP growth forecast at 7.4% for FY'19

    The Reserve Bank on Wednesday retained the GDP forecast for the current fiscal at 7.4 per cent on robust corporate earnings and buoyant rural demand, though it flagged global trade tensions for Indian exports.

    In the third bi-monthly monetary policy statement for 2018-19, RBI said various indicators suggest that economic activity has continued to be strong.
     
    The statement issued after three-day meeting of the Monetary Policy Committee (MPC) noted that the progress of the monsoon so far and a sharper than the usual increase in MSPs of kharif crops are expected to boost rural demand by raising farmers' income.

  • 15:20 (IST)

    CPI-based inflation is projected at 4.4 per cent in Q2
     
    Excluding the HRA impact, the CPI-based inflation is projected at 4.4 per cent in Q2, 4.7-4.8 per cent in H2 and 5 per cent, it added. On MSP hike, RBI said there is a considerable uncertainty and the exact impact would depend on the nature and scale of the government's procurement operations.
     
    "As such, only the incremental increase in MSPs over the average increase in the past will impact inflation projections. Second, the overall performance of the monsoon so far augurs well for food inflation in the medium-term. Third, crude oil prices have moderated slightly, but remain at elevated levels. Fourth, the central government has reduced Goods and Services Tax (GST) rates on several goods and services," RBI said.
     
    This will have some direct moderating impact on inflation, provided there is a pass-through of reduced GST rates to retail consumers, it added.
    Additionally, RBI said the inflation in items excluding food and fuel has been broad-based and has risen significantly in recent months, reflecting greater pass-through of rising input costs and improving demand conditions.
     
    Citing all these reasons and that the financial markets continue to be volatile, RBI said the assessment on inflation is based on all these factors combined.
     
    - PTI

  • 15:17 (IST)

    Governor Patel says turbulence is behind us

    RBI Governor Urjit Patel says the few months of turbulence are now behind us. We are possibly at the beginning of a currency war, Patel added.

  • 15:15 (IST)

    Dy Gov MK Jain on convergence of banks, NBFCs

    ​Convergence of Banks and NBFCs can combine the strengths of the two. All scheduled commercial banks may co-originate loans with Non-Banking Financial Companies-Non-Deposit taking-Systemically Important (NBFC-ND-SIs), to create eligible priority sector assets.

  • 15:12 (IST)

    After the initial knee-jerk reaction, Sensex and Nifty trade flat 

  • 15:09 (IST)

    Dy Gov BP Kanungo on the GSEC market

    Over the years, the RBI has been trying to deepen the GSEC market. Market participants have been requesting a review of the guidelines. The kind of things being requested whether the closing or opening of accounts will require a NOC from the RBI. They have been demanding whether they can have multiple accounts, which RBI does not allow. The guidelines should be out by October.

  • 15:04 (IST)

    Projecting impact of MSP on prices a challenging task: Viral Acharya, Dy gov

    The impact of the MSP hike on inflation projections is a challenging task. What is known as of now is that the increase in the Kharif crop MSP is higher than in the past few years. It has a direct impact on the prices of targeted food items.

    There could be an impact on rural wages. There could be a generalisation through inflation. It is only the incremental impact that needs to be factored. Secondly, the monetary policy transmission happens over several quarters and the two hikes, the previous and this one, will take some time to take effect. While growth in currency in circulation (CIC) has moderated, its expansion has remained above historical trend.

  • 14:57 (IST)

    RBI governor Urjit Patel outlines factors that can affect inflation outlook 

    Financial markets remain uncertain. Currency is depreciating against the US dollar. On the domestic front, the MPC took note of the rise in retail inflation. Even as the projection in the second-quarter has been revised marginally downwards, projections for the second-half remain. The first time projection for the first-quarter for the next financial year has been placed at five percent. Any fiscal slippage in the Centre and the states will have adverse implications and crowd out private investment going forward. The MPC noted mounting trade tensions and tightening financial conditions.

    Households reported an uptick in inflation expectations. Industrial growth strengthened in 2018. Non-food credit by banks is growing at 13 percent. Capacity utilisation by the manufacturing sector is robust. Investment activity remains broadly firm. GDP growth has been projected at 7.4 percent in this year. Projection of GDP for the first-quarter of FY2019-20 is 7.5 percent.

  • 14:47 (IST)

    Anticipating two more hikes, say experts 

    Market expert Ananth Narayan said as you come closer to the last quarter of this calendar year and first quarter of next year, there will be elections and there will be stress on fiscals. GST is falling short of budget numbers. We will see subsidy impact. "We are borrowing short-term money for oil, mobiles, too.
    Reasonable to expect that we have to be cautious. Our stock market is not looking great. Growth will come back," he said.

  • 14:40 (IST)

    RBI maintains FY19 GDP growth forecast at 7.4%

  • 14:39 (IST)

    'Not much of a dramatic move'

    What depends now is the governor' language in the press conference. Maybe the market will become hawkish again, said Ananth Narayan, market expert
     

  • 14:38 (IST)

    Monetary Policy Committee Keeps Stance Neutral On Policy

  • 14:35 (IST)

    RBI hikes repo rate by 25 bps to 6.50 percent

    "On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.5 per cent," the RBI said in the monetary policy review statement.

    "Consequently, the reverse repo rate under the LAF stands adjusted to 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per cent." 

    Hardening of prices is expected but softening global commodity prices will counter that, said the RBI, according to CNBC-TV18. Inflation numbers in the second-half of the current year are 4.8 percent. The important thing is that it is 4.8 percent against 4.7 percent earlier and five percent for the next-half.

  • 14:29 (IST)

    A rate hike is expected, it's a close call: Market expert

    "It is a close call and the market is expecting it also. Global context remains unclear and so you don't want to fall behind the curve. Our currency markets are still imbalanced. I feel the RBI has been neutral for a while and may wonder if a back-to-back hike is warranted. If they choose to wait, they will have to sound extremely hawkish. The market will react to the rate hike or hawkish tone," said market expert Ananth Narayan.

  • 14:24 (IST)

    RBI expected to raise rates again, say experts 

    The Reserve Bank of India is likely to raise interest rates on Wednesday while retaining a neutral policy stance as it aims to strike a balance between rising inflationary pressures and still recovering growth.

    If the RBI increases the rates by 25 basis points, it would be the first time since October 2013 that the central bank has hiked borrowing costs at two consecutive policy meetings.

    In June, the repo rate or the benchmark lending rate was raised for the first time in over four years, by 25 basis points to 6.25 percent.

    - Reuters 

RBI monetary policy latest updates: Indian shares extended gains early Wednesday to record level before reversing course to trade little changed ahead of the Reserve Bank of India’s (RBI) policy decision.

Also, weighing on sentiment were a private survey showing factory growth eased last month and conflicting signs over the state of US-China trade relations.

“Markets have already factored in the policy meet, probably since last quarter,” said Vinod Nair, head of research at Geojit Financial Services.

Thirty-seven of 63 economists in a Reuters poll last week said the RBI will raise rates on Wednesday, while inflation has been above the RBI’s medium-term target of 4 percent for eight months and expected to stay that way through to the end of next year.

Twenty-two economists said the next hike would come later this year, or early in 2019.

The Nikkei Manufacturing Purchasing Managers’ Index decreased to 52.3 in July from June’s 53.1, largely pressured by a modest weakening in demand and output. This was below a Reuters poll median of 53.0.

 RBI monetary policy updates: We are at the beginning of a currency war, says Governor Urjit Patel

Representational image. Reuters.

A Bloomberg report on Tuesday said that the United States and China were seeking to resume talks to defuse a battle over import tariffs.

However, later reports that the White House plans to propose tariffs of 25 percent instead of the initially proposed 10 percent on $200 billion of imported Chinese goods injected uncertainty back into global financial markets.

A source familiar with the plan said the announcement could come as early as Wednesday.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose as much as 0.2 percent before retreating to trade 0.1 percent lower.

The broader NSE Nifty was up 0.03 percent at 11,360.25 as of 0701 GMT, while the benchmark BSE Sensex was 0.08 percent lower at 37,575.68.

“Concern is that the trend of the market has been very narrow, driven only by blue chip stocks even though Q1 has been very positive,” Nair said.

Banks and automobiles were the top drag with Maruti Suzuki India Ltd shedding as much as 2.3 percent on lacklustre July sales, while Tata Motors Ltd slumped 5.3 percent after it reported its first quarterly loss in nearly three years on Tuesday.

HDFC Bank and ICICI Bank declined 0.9 percent and 1.5 percent, respectively.

Among gainers, Reliance Industries Ltd rose about 1.5 percent after an international arbitration panel issued an award in favour of a consortium that includes the company, rejecting the government’s claims in respect a gas dispute.

 Oil marketing companies Indian Oil Corp, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd climbed as Brent futures receded further.
- Reuters 

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Updated Date: Aug 01, 2018 18:03:30 IST