NEW DELHI: For the fourth straight time in a row, the Reserve Bank of India (RBI) today cut its benchmark repo rate, this time by a more than expected margin of 35 basis points. The announcement was made after the third bi-monthly policy review by the Monetary Policy Committee (MPC), led by RBI Governor Shaktikanta Das, for 2019-20. The benchmark rate is now at the lowest since April 2010.
Live Updates of RBI MPC meeting:
2:10 pm: one-year MCLR comes down to 8.25% per annum, from 8.40% annum
1:12 pm: The Business Expectations Index of the RBI's industrial outlook survey shows muted expansion in demand conditions in second quarter, although a decline in input costs augurs well for growth, RBI said.
1:11 pm: RBI Governor Shaktikanta Das said the central bank has lowered the GDP growth forecast owing to demand and investment slowdown, which is causing dampening effect on the growth.
1:05 pm: RBI's endeavour is that none of the large non-banking lenders collapses: Governor Das.
1:03 pm: Both Sensex and Nifty turned volatile after the RBI slashed lending rate and lowered the GDP growth estimates for the current financial year. After swinging nearly 300 points, the 30-share index was trading 20.61 points, or 0.06 per cent, lower at 36,956.24 around noon. The broader Nifty also fell 3.20 points, or 0.03 per cent, to 10,951.45.
1:02 pm: It is "prudent" to be accommodative: Shaktikanta Das.
1:01 pm: The rate cut has not been taken on "gut feel" but on hard data: Das.
1 pm: RBI has been pre-emptive in its actions on rates: Shaktikanta Das. He said RBI has always provided adequate liquidity to the system.
12:54 pm: Anand Rathi Securities' chief economist Sujan Hajra said the higher than expected rate cut of 35 bps clearly shows the RBI's concern about growth performance and outlook, and the urgency to take measures to revive growth.
12:52 pm: "The downward revision of the FY 20 GDP growth rate to 6.9 per cent with downward risk is a dovish signal," said V.K. Vijayakumar Chief Investment Strategist at Geojit Financial Services.
12:51 pm: RBI's next monetary policy statement will come out on October 4.
12:50 pm: Boosting aggregate demand and private investment has assume highest priority in RBI policy review.
12:48 pm: ICICI Securities' economist Anagha Deodhar said banks have already started cutting lending rates. "However, the lending rate cuts are much smaller than reduction in repo rate, indicating significant room for transmission," the expert said.
12:47 pm: There is no cartelisation by banks in holding onto higher lending rates: Shaktikanta Das.
12:45 pm: The Reserve Bank of India (RBI) has given priority sector tag to bank loans extended to registered non-bank lenders for financing agriculture, small businesses and home buyers within specified limits.
12:41 pm: RBI Governor Shaktikanta Das said the central bank wants commercial banks to lower rates now.
12:40 pm: Confident of credit demand picking up and growth reviving: Shaktikanta Das
12:38 pm: Shaktikanta Das said cutting repo rate by 25 basis point was "inadequate" while a 50 bps cut would have been "excessive" and so the MPC decided for a 35-basis point rate cut.
12:37 pm: The cut in repo rate is likely to result in lower EMIs for home and auto buyers.
12:34 pm: After the RBI policy was announced, the rupee witnessed high volatility and slipped towards 71 level. The currency opened on a weak note at 70.92 at the interbank forex market, then fell further to 70.99 against the USD. Rupee was trading at 70.91 at 12:15 pm, down 10 paise over its last close.
12:33 pm: RBI expects government to take further measures to revive growth: Shaktikanta Das.
12:29 pm: On the ongoing slowdown, RBI Governor Shaktikanta Das said it is cyclical and not structural.
12:28 pm: RBI MPC said that the impact of monetary policy easing since February 2019 is also expected to support economic activity, going forward.
12:27 pm: Yes Bank's chief economist Shubhada Rao said she believes that the RBI is set to cut rates in the next policy review once again in October. "It could be 15/20 bps also. It is clear that reviving growth has received most attention," she said.
12:26 pm: RBI governor Shaktikanta Das has assured sufficent liquidity to all needy sectors.
12:25 pm: To help NBFCs, the RBI has announced harmonisation of single counterparty exposure limit for banks’ exposure to single NBFCs with the general single counterparty exposure limit.
12:20 pm: The RBI has decided to set a Central Payment Fraud Registry to track frauds in the payment systems.
12:20 pm: The Reserve Bank of India has been the most aggressive in Asia in cutting interest rates this year to boost growth from a five- year low and spur investments.
12:17 pm: RBI Governor Shaktikanta Das said 35 bps repo rate cut is balanced and a 25 bps reduction would have been inadequate.
12:16 pm: RBI will soon issue detailed guidelines on permitting banks to on-lend through NBFCs. This is being done to increase credit flow to certain priority sectors which contribute significantly to the economic growth in terms of export and employment.
12:13 am: RBI said the interest rate cut would help "address growth concerns by boosting aggregate demand" and target private investment as a "priority".
12:10 pm: Currently, the National Electronic Funds Transfer (NEFT) payment system as a retail payment system is available for customers from 8 am to 7 pm on all working days of the week (except 2nd and 4th Saturdays of the month). Once the NEFT becomes available 24/7, it is expected to revolutionise the retail payments system in India.
12:06 pm: RBI said it will make NEFT system available on a 24x7 basis from December 2019.
12:04 pm: RBI said the decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2 per cent, while supporting growth.
12:02 pm: Inflation expectations of households remained unchanged in the July 2019 round of the Reserve Bank’s survey for the three months.
12:01 am: RBI has revised real GDP growth for 2019-20 from 7% to 6.9%.
11:58 am: CPI inflation is projected at 3.1% for Q2 FY20 and 3.5-3.7% for H2 FY20.
11:57 am: Four members, Dr. Ravindra H. Dholakia, Dr. Michael Debabrata Patra, Bibhu Prasad Kanungo and Shaktikanta Das, voted to reduce the policy repo rate by 35 basis points, while two members (Dr. Chetan Ghate and Dr. Pami Dua) voted to reduce the policy repo rate by 25 basis points.
11:57 am: The decision to cut interest rates was taken unanimously at the MPC meeting.
11:55 am: The MPC noted that inflation is currently projected to remain within the target over a 12-month ahead horizon.
11:54 am: On the issue of transmission of rate cuts, the RBI said banks reduced their weighted average lending rates (WALRs) on fresh rupee loans by 29 bps during the current easing phase so far (February-June 2019).
11:51 am: RBI said the reverse repo rate under the LAF stands revised to 5.15%, and the marginal standing facility (MSF) rate and the Bank Rate to 5.65%.
11:50 am: The MPC also decided to maintain the accommodative stance of monetary policy.
11:49 am: On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points (bps) from 5.75% to 5.40% with immediate effect.
11:34 am: RBI Governor Shaktikanta Das will attend a press conference, along with other members of the RBI MPC, after the announcement of the resolution of the Monetary Policy Committee, at 12 noon.
11:31 am: If the benchmark rate is cut to 5.5% today, it would be the lowest since April 2010.
11:29 am: The rupee also weakened today, for the fourth session in a row, at 70.93 a dollar, down 0.12% from its Tuesday's close of 70.83.
11:23 am: In each of the last three RBI MPC review meetings, it was decided to cut the short-term lending rate (repo rate) by 25 basis points.
11:22 am: In its last policy meeting held two months ago in June, the RBI had cut repo rate by 25 bps and also decided to change the stance of monetary policy from neutral to accommodative.
11:18 am: Swap markets are pricing in at least another 50 basis points of reductions before the end of 2019, according to a Bloomberg report.
11:13 am: As investors await the announcement of monetary policy, both Sensex and Nifty were little changed. Sensex was trading above 64 points at 37,041 while the NSE was up 11.30 points at 10,959.
11:11 am: In its MPC, the Reserve Bank is expected to retain its accommodative policy stance.