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RBI Monetary Policy Updates: Governor Shaktikanta Das hikes repo rate by 50 bps, lowers GDP forecast

RBI Governor Shaktikanta Das (ANI Photo)Premium
RBI Governor Shaktikanta Das (ANI Photo)

  • RBI Monetary Policy Updates: The decision of RBI Governor Shaktikanta Das headed six-member MPC has been announced today

RBI Policy September 2022 Updates: The decision of RBI Governor Shaktikanta Das headed six-member Monetary Policy Committee (MPC) has been announced on Friday. The Reserve Bank of India (RBI) has hiked the repo rate by 50 basis points to 5.90%, the fourth straight increase in the current cycle, to tame sustained above-target retail inflation rate.

RBI had slashed the repo rate in March, 2020 with an aim to cushion the impact of covid-induced lockdown, and maintained status-quo in the benchmark interest rate for almost two years before increasing it on May 4, 2022. The RBI has now raised rates by a total 190 basis points since its first unscheduled mid-meeting hike in May.

30 Sep 2022, 04:10:35 PM IST

Sensex has its best quarter in a year, thanks to RBI

Indian shares rose on Friday to record their best quarter in a year, boosted by banks and metal stocks, after the country's central bank hiked its key policy rate for the fourth straight time as expected to bring down persistently high inflation. The NSE Nifty 50 index ended up 1.6% at 17,094.35, and the S&P BSE Sensex gained 1.8% to 57,426.92. Both the indexes posted their biggest percentage jump in a month, breaking a seven-day losing streak. The Nifty and the Sensex ended up more than 8% this quarter.

30 Sep 2022, 03:28:10 PM IST

More hikes to follow?

"We expect the RBI to further increase the rate to 6.25-6.75% (Feb’20 at 5.15%) in FY23, which shall leave the negative real policy rate at 0-0.25%. In near-term, this shall impact businesses which have higher elasticity to leverage leading to fall in profitability. Overall macros of India are superior where revival as per RBI is broad-based, forecast of normal monsoon has brightened rural prospects, strong GST collection, improving manufacturing PMI & robust credit growth showcasing, only key worry remains the surging current account deficit," said Ambit Asset Management.

30 Sep 2022, 02:33:51 PM IST

RBI's confidence in Indian economy highlight of monetary policy: Religare Broking

"RBI raising repo rate by another 50 bps was very much in line with market expectations but it’s the confidence of RBI in the economy which has been the highlight of monetary policy. Governor’s confidence that GDP growth rate for FY23 will remain at 7% comes from his statement, “the late recovery in kharif sowing, the comfortable reservoir levels, improvement in capacity utilization, buoyant bank credit expansion and government’s continued thrust on capital expenditure."

“Lastly, Deputy Governor Mr. Michael Patra’s response to a question in the press conference where he stated, “soft-landing is for the developed economies, for India it’s a take-off" sums up everything. We believe RBI and Government are handling the economy far better than their major global counterparts," said Siddarth Bhamre, Head of Research, Religare Broking Ltd..

30 Sep 2022, 02:01:15 PM IST

RBI commentary has been a finely balanced one: Siddhartha Sanyal of Bandhan Bank

"The RBI commentary has been a finely balanced one – while global risks are discussed extensively, the RBI appears confident on the growth momentum in the Indian economy in the coming months. The modest downward revision in the FY23 GDP growth target to 7%, from 7.2% earlier, and leaving the inflation forecasts largely unchanged are on expected lines. While today’s RBI communication suggests future policy to remain data dependent and another round of rate hike cannot be ruled out, overall, the MPC refrained from springing any major surprise leading to broadly favourable reaction from most segments of financial markets," said Siddhartha Sanyal, Chief Economist and Head of Research, Bandhan Bank.

30 Sep 2022, 01:42:54 PM IST

RRBs' internet banking facilities

“The move to rationalise criteria that allows Regional Rural Banks (RRBs) to provide internet banking facilities to their customers will help improve the reach of digital banking in rural areas," said Sachchidanand Shukla, Chief Economist, Mahindra & Mahindra.

30 Sep 2022, 01:31:00 PM IST

Payment aggregators

Offline payment aggregators (PAs) who aid in face-to-face transactions at merchant outlets will now come under the regulatory purview of RBI, Governor Shaktikanta Das announced on Friday. "Keeping in view the similar nature of activities undertaken by online and offline PAs, it is proposed to apply the current regulations to offline PAs as well," Das said after announcing the bi-monthly policy review.

30 Sep 2022, 01:00:45 PM IST

‘Rates market should take this positively’

 “RBI has lowered its GDP growth forecast and CPI inflation has been maintained at 6.7% for the current financial year. 67% of the fall in forex reserves by 100 billion USD is due to revaluation effect. RBI refuses to state what could be the terminal repo rates and remain date dependent. Overall, the monetary policy is not as hawkish as market expected. Global adverse development has been acknowledged but RBI monetary policy stance is pre dominantly domestic driven. Rates market should take this positively and should trade in a range," said Murthy Nagarajan, Head-Fixed Income, Tata Mutual Fund.

30 Sep 2022, 12:22:15 PM IST

Banks loan provisioning 

Governor Shaktikanta Das on Friday said the Reserve Bank is mulling to adopt the ‘expected loss’ approach for loan provisioning. At present, the banks follow the ‘incurred loss’ approach, where money is set aside after an asset turns sour.

30 Sep 2022, 12:11:43 PM IST

Rate hike may further slowdown local lending activity

“As the cost of borrowing for corporates and individuals will further increase, the Repo Rate hike may further slowdown the local lending activity in the country till the market adapts to the new rates. The Governor, in this speech, also announced a discussion paper on securitisation of stressed assets. Such framework, once implemented, will provide alternate mechanism for securitisation of stressed loans in addition to the currently available route of transfer to asset reconstruction companies, providing new avenues to banks and financial institutions to deal with stressed loans. The Governor also announced the discussion paper on the expected credit loss framework for loan loss provisioning for banks, this is also a welcome step to develop a more robust banking culture." Utsav Johri, Partner at law firm JSA.

30 Sep 2022, 11:37:31 AM IST

'Balanced guidance'

“The outcome of the MPC meeting is on expected lines as RBI raised the repo rate by 50bps. The central bank gave a very balanced guidance emphasizing on continuing resilient domestic economic growth with risks being rising instability in the global economic and financial environment. Overall the markets have reacted positively to the policy announcement," said Ritika Chhabra- Economist and Quant Analyst, Prabhudas Lilladher.

30 Sep 2022, 11:15:46 AM IST

Repo rate hike in-line with expectations

“Repo policy rate hike of 50 bps is in line with our expectations. Given the global adverse conditions we remain wary on the pressure on INR and hence the need for continued rate hikes. We expect the MPC to hike 35bps in the December policy. However, with inflation expected to fall within 6% threshold in 4QFY23, we expect the MPC to probably pause and assess the lagged impact of monetary tightening," said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.

30 Sep 2022, 10:59:54 AM IST

'RBI's positive commentary market positive'

“The RBI governor’s comments today is a reaffirmation of this ‘India resilient’ theme. It was this positive commentary on India’s growth impulses and projection of 7% GDP growth with 6.7% inflation for FY 23 that has come as a positive even while the policy announcements relating to rates were on totally expected lines. The Governor's confident statement that CAD can be financed comfortably even with crude at $100 for the rest of the year is reassuring. In brief the positive commentary is market positive," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

30 Sep 2022, 10:46:39 AM IST

Bank stocks gain

Banking stocks gain on RBI policy announcement, Nifty Bank rises more than a per cent after the central bank hiked repo rate by 50 bps on Friday

30 Sep 2022, 10:37:05 AM IST

‘Economic activity remains resilient’

High frequency data for the second quarter indicate that economic activity remains resilient, private consumption has been holding up. Rural demand is also gaining gradually, investment demand picking up, agriculture sector remains resilient: Shaktikanta Das

30 Sep 2022, 10:33:48 AM IST

RBI Governor on rupee depreciation

Rupee movement orderly against US dollar; depreciated only 7.4% this year till September 28, and has fared better than many other currencies. RBI does not have a fixed exchange rate for rupee; intervenes in market to curb excessive volatility and RBI forex reserves “umbrella" remains strong, said Das 

30 Sep 2022, 10:29:22 AM IST

Das on global economy

“We are faced with another storm of aggressive monetary tightening globally. The global economy is in the eye of a new storm," said Das in a virtual briefing, adding the move is causing volatility and risk aversion in the financial markets. 

30 Sep 2022, 10:24:53 AM IST

Inflation forecast unchanged

RBI has maintained consumer price index (CPI) inflation forecast for FY23 at 6.7%

30 Sep 2022, 10:18:44 AM IST

GDP growth forecast

The RBI has lowered the real gross domestic product (GDP) growth forecast for FY23 to 7% from 7.2%, said Governor Das

30 Sep 2022, 10:15:49 AM IST

Inflation expected to remain elevated

The recent correction in global commodity prices if sustained may ease cost pressures in coming months. Today inflation is hovering around 7% and we expect it to remain elevated at 6% in the second half of the year: Governor Shaktikanta Das

30 Sep 2022, 10:09:41 AM IST

Bank rates

The standing deposit facility (SDF) rate and the marginal standing facility (MSF) rate were also increased by the same quantum to 5.65%and 6.15%, respectively

30 Sep 2022, 10:08:13 AM IST

RBI hikes repo rate

RBI has hiked the repo rate for the fourth time in a row, by 50 bps to 5.9% with immediate effect. MPC decided to remain focused on 'withdrawal of accommodation' 

30 Sep 2022, 09:25:56 AM IST

Market opens flat

Equities open flat with a negative bias as Sensex dips 185 points, Nifty falls 0.2% ahead of RBI's policy decision

30 Sep 2022, 09:13:45 AM IST

Rupee opening

Rupee rises to 81.59 against US dollar in early trade on Friday as against Thursday's close of 81.86 per dollar ahead of the RBI policy

30 Sep 2022, 09:08:17 AM IST

'Hands tied in following the Fed’

“Central banks across the world, led by US Fed upped their hawkish tone and are now ready for a larger growth sacrifice in their efforts at containing inflation. Inflation pressures for India could sustain with rupee depreciation and also due to a relatively weak Kharif season. We now expect the RBI to hike the repo rate by 50bps on 30th September and continue raising for the next two policies for a terminal rate of 6.50% by end-March 2023," said Indranil Pan – Chief Economist, YES BANK.

 

30 Sep 2022, 08:43:42 AM IST

MPC statement

RBI Governor Shaktikanta Das will announced the Monetary Policy statement at 10:00 am on Friday, September 30, 2022

30 Sep 2022, 08:28:18 AM IST

Sliding rupee

Rupee has been falling sharply and hovering near 82 against the US dollar. The RBI is expected to come out with steps to shore up foreign capital inflows to check the slide in the domestic currency

30 Sep 2022, 08:19:45 AM IST

Inflation remains high

The retail inflation, at 7%, has made it the eighth month that of staying above the RBI's upper tolerance limit of 6%, strengthening the case for continued monetary tightening

30 Sep 2022, 08:08:00 AM IST

Another rate hike on the cards

The RBI is widely expected to increase the key interest rate again for the fourth time in a row. Experts expects the central bank to raise the repo rate by 50 basis points to tame inflation

30 Sep 2022, 08:02:47 AM IST

RBI MPC Meet

The six-member Monetary Policy Committee headed by the RBI Governor Shaktikanta Das started deliberations on the bi-monthly policy review on Wednesday

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