RBI MPC Meeting Highlights- Guv Das surprises with unexpected repo rate pause at 6

RBI MPC Meeting Highlights: Guv Das surprises with unexpected repo rate pause at 6.5%; war against inflation goes on

RBI MPC Meeting 2023 Highlights: Reserve Bank of India Governor Shaktikanta Das-headed Monetary Policy Committee has decided not to raise the repo rate, keeping it at 6.5%. The RBI MPC, with a 5:1 majority, maintained the withdrawal of accommodation stance. The RBI also stated the real GDP growth projection for FY24 is at 6.5%. However, fears of sustained core inflation remain persistent as weather-related vagaries, OPEC+’s surprise announcement and rising commodity prices. However, the global banking crisis has been heralded in by rising interest rates across the global central banks, which is driving concerns that rapidly rising rates does not expose the domestic banking system to any shocks.Live Updates 13:11 (IST) 6 Apr 2023 RBI MPC Meeting: Repo rate to remain paused

“With an emphasis on inflation target of 4% and withdrawal of accommodation, RBI has kept a non-committal stance on such pauses in the forthcoming meeting. With lagged impact of cumulative 250 bps hike on inflation and persisting global financial uncertainties, repo rate is expected to remain at the current levels going forward as well,” said Rahul Shresth – Vice President at Avener Capital.

12:43 (IST) 6 Apr 2023 RBI MPC Meeting: 10-year GSec to stay in range of 7.2%-7.4%

“MPC’s incremental action will be largely domestic data dependent. A longish pause continues to be our expectation. While stabilising Brent oil and monsoon verdict remain key events to watch, the bond levels will now focus on demand-supply and liquidity guidance from time to time. Meanwhile we expect 10-year GSec to stay in the range of 7.20%-7.40%,” said Radhavi Desphande, President & Chief Investment Officer, Kotak Mahindra Life Insurance Company.

12:26 (IST) 6 Apr 2023 RBI MPC Meeting: Pause needed to understand impact of rate hikes

“On the real side, domestic demand side indicators indicated by PMI and high frequency indicators remain strong but faces a probable downside risk through supply side inflation, weak external demand and tempered global financial market. Due to lag effect, full transmission of earlier rate hikes is yet to take place and this pause is necessary to ensure trajectory of long terms trend of inflation without tempering growth prospects,” said Esha Khanna, Assistant Professor, NMIMS Sarla Anil Modi School of Economics.

12:13 (IST) 6 Apr 2023 RBI MPC Meeting: RBI didn’t take lead from US Fed

Our monetary policy is determined by domestic factors, never determined by US action: RBI Guv Shaktikanta Das

12:09 (IST) 6 Apr 2023 RBI MPC Meeting: Supply side measures also used to fight inflation

Interest rates alone have not been used to fight inflation, they have been used in conjunction with supply side measure: Deputy Governor Michael Patra

12:07 (IST) 6 Apr 2023 RBI MPC Meeting: Policy always forward looking

Monetary policy is always forward looking. There are so many external developments taking place, we will be watchful of the situation. We will take further action if and whenever appropriate: RBI Guv Shaktikanta Das.

12:04 (IST) 6 Apr 2023 RBI MPC Meeting: Press conference begins

The RBI Governor begins his address to the media following the policy announcement.

11:55 (IST) 6 Apr 2023 RBI MPC Meeting: Positive step towards rupee internationalization

“Relaxation of offering NDF rupee derivatives to resident users in the onshore market will help deepen the rupee trades in the FX market and is a positive step towards rupee internationalization, especially with the backdrop of increased rupee bilateral trades,” said Vivek Iyer, Partner and Leader, Financial Services Risk, Grant Thornton Bharat.

11:38 (IST) 6 Apr 2023 RBI MPC Meeting: Impact on banking sector

“The Indian banking sector remains healthy, with due credit to the regulator’s stringent regulations. We expect the systemic credit growth to remain buoyant for the Mar’23 quarter. However, management commentaries on growth momentum sustenance going into FY24 would be crucial. While banks have seen a sharp NIM expansion so far, headwinds on margins will surface as banks step into FY24,” said Naveen Kulkarni, Chief Investment Officer, Axis Securities.

11:37 (IST) 6 Apr 2023 RBI MPC Meeting: RBI diverging from global central banks

“RBI has chosen to tread an independent path despite the global headwinds and challenges and it is a welcome step to create the requisite atmosphere for growth and revival of the economy which is still at a nascent stage,” said Jyoti Prakash Gadia, Managing Director, Resurgent India.

11:32 (IST) 6 Apr 2023 RBI MPC Meeting: Rate cut from CY25 expected

“It is expected that going ahead the RBI will pause the rates at this level and start easing the rates from CY25. The central bank is aiming to strike a balance between growth rate and inflation,” Cyrus Mody, Founder & Managing Partner, Viceroy Properties said.

11:27 (IST) 6 Apr 2023 RBI MPC Meeting: Cheer seen in INR

“RBI has proposed to permit banks with IFSC Banking Unit (IBU) to offer non-deliverable foreign exchange derivative contracts to residents. It is a welcome step towards deepening INR liquidity, moving towards internationalization of rupee and offering flexibility to residents in meeting their hedging requirements. After the announcement, some cheer was seen in INR. Overall, USDINR may find a strong support at 81.80 on intraday basis while 82.20 acting as a resistance. Positionally, consolidation may continue between 81.60-82.55 levels for some more time,” said Kunal Sodhani, VP, Global Trading Center, Shinhan Bank.

11:14 (IST) 6 Apr 2023 RBI MPC Meeting: GDP growth rate optimistic

“The 6.5% GDP growth rate appears to be on the optimistic side when seen in the context of a slowing global economy,” said V K Vijayakumar, Chief Investment Strategist at Gojit Financial Services.

11:06 (IST) 6 Apr 2023 RBI MPC Meeting: Effect on real estate

“From a real estate market perspective, the sector has weathered multiple home loan interest rate increases from a low of 6.5% to 8.75%, supported by favourable house purchase affordability and the strong desire towards home ownership. Therefore, a pause in any further rise in the lending rates should support the existing growth momentum in the housing sector,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.

10:56 (IST) 6 Apr 2023 RBI MPC Meeting: Rate cut in Oct-Dec quarter

“A robust rabi crop will most likely ease the pressure on inflation. A steep rate hike will hurt growth. Today's move also raises hope of a rate ease cycle to start as early as the October-December quarter,” said Colin Shah, MD, Kama Jewelry.

10:53 (IST) 6 Apr 2023 RBI MPC Meeting: Hawkish pause

“The decision to pause at 6.5% was a positive surprise. We believe the RBI is concerned on the uncertainty from global financial markets and the pause is reflective of this concern. We view this policy as a hawkish pause. The tone of the policy remains concerns on inflation, especially core inflation and remains focused on reaching the 4% target over the medium term. The RBI remains comfortably on the growth front, for now. We believe the risks to this outlook is skewed towards the downside. We expect the RBI MPC to remain on an extended pause. Scope for further hikes is limited given our growth-inflation outlook and impact of the past rate hikes on the the same,” said Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities.

10:46 (IST) 6 Apr 2023 RBI MPC Meeting: Bond yields crash

Government bond yields fell following the Reserve Bank of India's decision to maintain status quo on policy rates. This led to a sharp drop in the benchmark bond yield, which reached its lowest level in almost seven months. The 10-year benchmark bond yield fell to 7.1469%, down from 7.2857% prior to the decision.

10:43 (IST) 6 Apr 2023 RBI MPC Meeting: Expanding scope of UPI

The RBI has proposed to expand the scope of UPI by allowing pre-sanctioned credit lines to be accessed through the platform, which will further enhance the capabilities and convenience of the system for users: RBI Guv Shaktikanta Das.

10:40 (IST) 6 Apr 2023 RBI MPC Meeting: Easy to access unclaimed deposits

A new centralised web portal for public to search unclaimed deposits will be launched: RBI Guv Shaktikanta Das.

10:39 (IST) 6 Apr 2023 RBI MPC Meeting: Pause not unexpected

“The RBI had the option of a rate hike or a pause. The pause was not entirely unexpected. The RBI will watch developments and data before taking the next call. The market expects the RBI to fetch maximum run and win the match on inflation and growth,” said Nilesh Shah, MD, Kotak Mahindra AMC.

10:38 (IST) 6 Apr 2023 RBI MPC Meeting: India’s CAD outlook

India's CAD was at 2.7% of GDP for the first 3 quarters of FY23. The current account deficit is projected to remain moderate in Q4FY23: RBI Guv Shaktikanta Das.

10:31 (IST) 6 Apr 2023 RBI MPC Meeting: Guv on rupee

We remain watchful and focussed on maintaining the stability of Indian rupee: RBI Guv Shaktikanta Das. The rupee falls below the 82 mark as the RBI MPC decided to maintain the current repo rate at 6.5%.

10:26 (IST) 6 Apr 2023 RBI MPC Meeting: Markets rise on RBI announcements

Domestic indices surged on Thursday after RBI MPC decided not to hike the repo rate, keeping the key lending rate at 6.5%. The NSE Nifty 50 was trading near 17,600 and Sensex jumped 140 points. Bank Nifty surpassed 41,150.

10:24 (IST) 6 Apr 2023 RBI MPC Meeting: Banking, NBFC to benefit from unchanged repo rate

“The decision to maintain the repo rate unchanged is a positive sign for the banking and NBFC sectors, and it is expected to benefit other sectors such as real estate and infrastructure. However, the persistent inflation and global banking crisis remain areas of concern, and it is crucial to monitor the overall impact of the past rate hikes,” said Sonam Srivastava, Founder, Wright Research.

10:23 (IST) 6 Apr 2023 RBI MPC Meeting: Inflation projections

Inflation for FY24 projected at 5.2%: RBI Guv Shaktikanta Das

10:21 (IST) 6 Apr 2023 RBI MPC Meeting: Real GDP growth projections

REAL GDP GROWTH PROJECTIONS IN FY24

Q1FY24: 7.8%

Q2FY24: 6.2%

Q3FY24: 6.1%

Q4FY24: 5.9%

10:15 (IST) 6 Apr 2023 RBI MPC Meeting: SDF, MSF unchanged

Standing deposit facility will remain unchanged at 6.25%, Marginal Standing Facility also unchanged at 6.75%: RBI Guv Shaktikanta Das

10:14 (IST) 6 Apr 2023 RBI MPC Meeting: FY24 GDP

Real GDP growth for FY24 is projected at 6.5%: RBI Guv Shaktikanta Das

10:10 (IST) 6 Apr 2023 RBI MPC Meeting: Policy can still be seen as accommodative

When we started the rate cut cycle in 2019, the CPI was around 2% and the repo rate was 6.5%. However, inflation is 6.4% currently while the repo rate is 6.5% and given its current level, our policy can still be seen as accommodative. This is why the RBI MPC decided to maintain a withdrawal of accommodation stance: RBI Guv Shaktikanta Das

10:08 (IST) 6 Apr 2023 RBI MPC Meeting: Will not hesitate to raise repo rate in future meetinfs

The repo rate has been maintained so that the MPC can assess the progress made so far, while closely monitoring the domestic and global situations. The MPC will not hesitate to raise the repo rate in future meetings: RBI Guv Shaktikanta Das

10:06 (IST) 6 Apr 2023 RBI MPC Meeting: Withdrawal of accommodation

The RBI MPC, with a 5:1 majority, maintained the withdrawal of accommodation stance: RBI Guv Shaktikanta Das

10:05 (IST) 6 Apr 2023 RBI MPC Meeting: Repo rate unchanged

RBI MPC decided not to hike the country's repo rate, keeping the key lending rate at 6.5% unanimously: RBI Governor Shaktikanta Das

10:03 (IST) 6 Apr 2023 RBI MPC Meeting: Global economy facing headwinds

The global economy is facing headwinds. Bank failures and contagion risks are forcing central banks to take additional notice. What we are witnessing today is unprecedented uncertainty in global politics: RBI Governor Shaktikanta Das

09:54 (IST) 6 Apr 2023 RBI MPC Meeting: Market update ahead of the policy announcement

Domestic indices remained under pressure ahead of RBI MPC rate hike announcement. The NSE Nifty 50 fell 27.15 pts or 0.15% to 17,529.90 and BSE Sensex dipped 96.19 pts or 0.16% to 59,593.12. Bank Nifty plunged 130.90 pts or 0.32% to 40,868.25. The top gainers on Nifty 50 were Larsen & Toubro, BPCL, Adani Enterprises, Bajaj Auto and Dr Reddy while the top losers were Hindustan Unilever, Hero MotoCorp, Nestle India, HCL Tech and Coal India.

09:44 (IST) 6 Apr 2023 RBI MPC Meeting: Banking crisis considerations

“There have been increasing concerns that rapid rate hikes by central banks have been a major driver for recent failures in small banks of the US and EU. Thus, RBI will have to balance its commitment towards taming inflation while ensuring that India's financial system is not exposed to extraordinary shocks,” said Rohin Agarwal, Vice President at Avener Capital.

09:37 (IST) 6 Apr 2023 RBI MPC Meeting: Real rates

“A 25 bps hike would imply ex-ante real rates at around 1.4% – keeping one-year forward inflation forecast as the anchor, giving them enough buffer above their supposed forward neutral real rate of ~1%,” said Madhavi Arora, Lead – Economist, Emkay.

09:30 (IST) 6 Apr 2023 RBI MPC Meeting: RBI MPC likely to follow US Fed, ECB leads

“The course of rate hike is more likely to be aligned with the stance taken by key central banks such as the US Fed,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.

09:11 (IST) 6 Apr 2023 RBI MPC Meeting: Members of the MPC

The MPC consists of three RBI officials, including the RBI Guv, and three external members appointed by the central government. The external members are Shashanka Bhide (Honorary Senior Advisor, National Council of Applied Economic Research, Delhi); Ashima Goyal (Emeritus Professor, Indira Gandhi Institute of Development Research, Mumbai); and Jayanth R Varma (Professor, Indian Institute of Management, Ahmedabad).

09:01 (IST) 6 Apr 2023 RBI MPC Meeting: Repo rate could touch a seven-year high

If the RBI hikes the repo rate by 25 bps, the key lending rate will become the highest in seven years, from April 2016 onwards.

08:58 (IST) 6 Apr 2023 RBI MPC Meeting: OPEC reigniting inflation fears

“Reigniting fears of a spike in inflation are the rise in crude oil prices to $81 a barrel after a surprise decision by the OPEC nations to slash production,” said Prashanth Tapse, Senior VP (Research), Mehta Equities, while predicting the RBI may raise the key lending rate by 25 bps.

08:56 (IST) 6 Apr 2023 RBI MPC Meeting: SGX Nifty down ahead of RBI MPC

SGX Nifty traded in the red, indicating a lower start for the domestic Indian equity markets ahead of the RBI's policy announcement. Nifty futures traded at 17,579 down 45.5 points on the Singaporean Exchange.

08:51 (IST) 6 Apr 2023 RBI MPC Meeting: Repo rate hikes over the last year

February 8, 2023: Repo rate increased by 25 bps to 6.50%

December 7, 2022: Repo rate increased by 35 bps to 6.25%

September 30, 2022: Repo rate increased by 50 bps to 5.90%

August 5, 2022: Repo rate increased by 50 bps to 5.40%

June 8, 2022: Repo rate increased by 50 bps to 4.90%

May 4, 2022: Repo rate increased by 40 bps to 4.40%

08:44 (IST) 6 Apr 2023 RBI MPC Meeting: Prediction of RBI’s stance

According to a Reuters Poll, most of the respondents (20 out of 36) anticipate that the central bank will continue to adopt its 'withdrawal of accommodation' stance. On the other hand, the remaining 16 respondents believe that the bank will switch to a neutral stance.

08:43 (IST) 6 Apr 2023 RBI MPC Meeting: Policy tone to be balanced

“The policy tone is expected to be balanced, albeit non-committal, with its move to keeping a ‘neutral’ stance. The MPC will be deriving comfort from the: 1) recent de facto less (perceived) Fed tightening/easing, 2) monetary-policy lags of past hikes, 3) improving external sector dynamics, and 4) system liquidity being back in deficit and call rate hugging repo rate,” said analysts at Emkay.

08:43 (IST) 6 Apr 2023 RBI MPC Meeting: Unseasonal rains add to inflationary woes

“The supply side issues likely to be created due to unseasonal rains damaging the crops are another pressing factor for the additional inflation control requirement,” said Jyoti Prakash Gadia, Managing Director, Resurgent India.

08:36 (IST) 6 Apr 2023 RBI MPC Meeting: RBI to hike rates

“Given that Federal Reserve & European Central Bank have gone ahead with rate hike in spite of recent global developments and Q4FY23 inflation numbers are higher than RBI projections, RBI will hike repo rate by 25 bps to 6.75%,” said Deepak Agrawal, CIO – Debt, Kotak Mahindra AMC.

08:30 (IST) 6 Apr 2023 RBI MPC Meeting: Inflation concerns

In February, the on-year increase in domestic CPI stood at 6.44%, which was slightly lower than January's figure of 6.52%. However, the inflation rate has exceeded the central bank's desired range of 2%-6% in ten out of the last twelve prints.