RBI Monetary Policy: Here are the Key Highlights

The Reserve Bank of India (RBI) has announced the monetary policy in which it has kept the repo rate unchanged at 4%. Monetary Policy Committee decides to retain its 'accommodative' policy stance, Governor Shaktikanta Das said.

The governor said that the central bank will remain accommodative as long as necessary to sustain growth on a durable basis.

According to a Mint poll, majority of bankers and economists had said the central bank is maintain its accommodative stance to entrench the recovery that has begun.

Catch all the latest updates of RBI Monetary Policy:

-Rajni Thakur, Economist, RBL Bank on the monetary policy, ''MPC decisions today strongly backs up various RBI’s communication on continued monetary policy support till growth revival is broad based. The key take away were two: first, RBI’s bend towards looking through inflationary pressures in current uncertain times and err in favour of growth and second, RBI’s commitment to ensure smooth execution of government’s huge borrowing program by a separate G-sec Acquisition Program to purchase government bonds in FY22. This should help bond market sentiments.''

-''The unchanged repo rate by RBI is a welcome step amidst the rising Covid cases in the country. The second wave of Covid-19 is now threatening to a promising recovery. It appears that there will be no repo rate hikes before October. Some special attention should be paid to the real estate sector, especially commercial real estate, which significantly contributes to the country’s economic growth,” said Shiv Parekh, the founder of hBits a fractional real estate platform.

-Sanjay Kumar, CEO & MD, Elior India on policy announcement: ''The RBI maintained an accommodative stance that’s given the spike in inflation to nearly 5%. It is critical to watch how oil prices play out over the next few weeks. While its good for the market, the oversupply of money could result in a sudden spike in inflation and a hike in interest rates making manufacturing exports uncompetitive.. Indeed a tough road lies ahead This is a rather bold step to continue maintaining the repo rate even though the inflation has touched a near peak over the last few quarters.''

-''The monetary policy announcement is on expected lines. However, one can conclude that the stance is more dovish than expected with the governor reinforcing the central bank's commitment to remain accommodative to support & nurture the recovery as long as necessary. The bond market has taken the announcement positively with the 10-year yield falling. The governor's assurance to ensure an orderly evolution of the yield curve also is confidence-inspiring," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

-Current Covid surge should not impact growth so much this time: Shaktikanta Das

-RBI committing its balance sheet to the conduct of monetary policy for the first time, says RBI deputy governor Michael Patra

-Inflation outlook looks uncertain: RBI

-Have given an explicit guidance on liquidity for market: RBI

-G-SAP is in addition to normal instruments in our toolkit for liquidity management: RBI

-Will have to wait for the situation to arise in order to exit accommodative stance

-Our signals, actions and communication must be read together, says Das

-G-SAP will run alongside normal liquidity operations: RBI

-G-SAP is different from the usual OMO calendar, says RBI Governor

-Will ensure orderly evolution of yield curve: Das

-RBI Governor says addressing the overall liquidity situation in the market.

-RBI Governor Shaktikanta Das addresses the media

-Madhavi Arora, Lead Economist, Emkay Global Financial Services on RBI's MPC announcement: ''The bigger move was with regards to yield management as RBI tries to break the negative loop of liquidity (mis)communication and sovereign premia. The RBI stressed on smooth liquidity management and orderly Gsec borrowings, with a more vocal and defined secondary market GSAP 1.0 (Gsec acquisition program) to be read largely as an OMO calendar with secondary purchases worth ₹1tn in 1QFY22.''

''This could lead to much lower sovereign risk premia ahead amid elevated borrowing calendar this year. We expect the RBI to get more accountable and action oriented as we move into FY22. We see net OMO purchases to the tune of Rs4.5-5tn in FY22 amid elevated supply, some natural normalization of liquidity in FY22 and shifting out of banks SLR demand,'' Arora added.

-''The RBI has taken reassuring steps to infuse additional liquidity into the housing sector through the interventions of increased financing to NHB and extension of priority sector tag for bank funding to NBFCs for housing loans,'' Sinha added.

''RBI interventions will help maintain adequate liquidity as well as prevent hardening of yields in bond market. These measures will ensure economic stability as well as keep real estate sector stay afloat during such precarious times,'' said Rajani Sinha, Chief Economist and National Director, Knight Frank India.

-Siddhartha Sanyal, Chief Economist and Head - Research, Bandhan Bank on today's RBI MPC announcement: ''The sharp knee-jerk positive reaction by the bond market after today’s monetary policy and related announcements is clearly justified. Against the backdrop of a large government borrowing and renewed uncertainties with fresh surge in Covid infections, a key challenge for the RBI is to maintain orderly conditions in financial markets.''

''today’s announcement of the G-SAP is particularly important. The G-SAP will almost serve the purpose of a OMO calendar, which had been on the bond market’s wish-list for a long time. While we don’t think that the central bank is “targeting” any level for bond yields, they clearly recognize the need for anchoring interest rates during the current nascent stage of growth recovery and remain forthcoming in conveying that to the markets'' Sanyal said.

-On RBI policy announcement, S Ranganathan, Head of Research at LKP Securities said, "RBI kept rates unchanged as expected and will continue with its accommodative stance to mitigate the impact of the Pandemic. An increase in the pace of vaccination and rural demand would in our view help growth"

-To ensure orderly conduct of government borrowing; preserve financial stability: Das

-Maximum end of day balance for payment banks doubled to ₹2 lakh

-RTGS and NEFT facilities will be extended extends to digital payments intermediaries, beyond banks

-Enhancing ways & means advance (WMA) limit to ₹47,010 crore, up 46% from current limit of ₹32,225 crore: RBI Governor

-Governor Das says that a body will be set up to review the functioning of Asset Reconstruction Companies (ARCs) and recommend measures.

- ₹50,000 crore of lending support to be provided to Nabard, NHB and Sidbi as fresh lending in 2021

-The TLTRO scheme is being extended by 6 months, up to September 30, 2021

-To purchase ₹1 lakh crore of G-secs under G-SAP in Q1: Das

-RBI Governor announces Secondary Market G-Sec Acquisition Programme 1.0; to purchase ₹25,000 crore of G-Secs on April 15 under G-SAP.

-RBI will support market with adequate liquidity via its various tool kits: Governor

-RBI is indirectly expanding liquidity. Have conducted liquidity for orderly market conditions: Das

-CPI for FY22 is seen at 5.1%

-Q1FY22 GDP growth outlook is 22.6 percent, and for Q2FY22 at 8.3 percent, said the governor

-GDP growth outlook for FY22 is maintained at 10.5 percent. The MPC had projected this estimate during the previous policy announcement.

-Global economy is showing some recovery but the path remains uncertain, says Das

-Rural demand remains resilient, urban demand gaining traction and should pick up: Governor Das

-RBI Governor Shaktikanta Das says vaccine distribution & its efficacy is key to global economic recovery

-MPC voted unanimously to leave repo rate unchanged

-The central bank will remain accommodative as long as necessary to sustain growth on a durable basis, says Shaktikanta Das

-Marginal standing facility and bank rate kept unchanged at 4.25%

-RBI keeps repo rate unchanged at 4%, maintains accommodative stance; Reverse repo rate stands at 3.35%