The RBI monetary policy committee (MPC) decided to keep the policy repo rate unchanged at 6.50 per cent and other policy rates were also kept unchanged. "The monetary policy committee decided unanimously at 6..50 per cent with a readiness to act if the situation so warrants," Das said. The RBI Governor also said that the withdrawal of accommodation and that the repo rate hike has been paused only for this meeting.
AT1 bonds ecosystem remains quite robust, says RBI governor
Even as the fate of his decision to fully write off ₹8,300 crore of outstanding additional tier 1 (AT1) bonds of Yes Bank as part of its rescue is pending before the apex court, RBI Governor Shaktikanta Das on Thursday defended the debt instrument as a globally legitimate one.
"The AT1 bonds ecosystem remains quite robust, quite stable. And it is a part of the Basel III regulations and we have adopted that in our country as well. And there is nothing more really I'd like to say on this," Das told reporters at the customary post-policy presser
"When banks sell such bonds, the terms and conditions are given out clearly and investors, who are mostly ultra-high networth individuals, are expected to read the terms and conditions."
Nothing innovative presented by NUE applicants, says RBI
Six New Umbrella Entity (NUE) hopefuls, including Facebook, Google and Amazon, have failed to present any innovative solution due to which efforts to build an alternative to the NPCI have not moved ahead, the RBI said on Thursday.
A total of six consortiums which had the global tech majors teaming up with local entities including Axis Bank and ICICI Bank had applied in 2021 for the NUE licence.
"Of the proposals that we have received, we did not quite see any innovative or infrastructural solution that had come up," Deputy Governor T Rabi Sankar told reporters when asked about progress on the front.
‘RBI is keenly intent in seeing the inflation within the target band’
“Pausing its rate hiking cycle, the RBI clearly takes into consideration a likely moderation in the inflation going forward. The Governor mentions recent surveys that indicate a reduction in the cost concerns and a drop in the household inflation expectations. Oil price projection have been lowered and a good rabi harvest factored in the build out of the future inflation trajectory. Keeping an eye on the evolving global financial stability concerns, the RBI preferred to pause to take stock of the impact of the 250 bps rate hikes that it has already done over the past 11 months. On the other hand, the Governor indicated that “the war against inflation has to continue" and that the RBI is keenly intent in seeing the inflation within the target band. Any inflation shocks in the future thus remains on a close watch. Consequently, the forward guidance is unwaveringly hawkish. It considers inflation being an ongoing risk and keeps the door open for further rate increases in the future by not changing its stance of “withdrawal of accommodation". Effectively, I think that the RBI has now moved into an extended pause. Given the large number of moving pieces, it would however be difficult immediately to predict if the next change is a hike or a cut," said Indranil Pan - Chief Economist, YES BANK on the RBI Monetary policy
‘RBI has given priority to financial stability and economic growth’
"With a lesser expected “pause" in the policy rate hikes, the RBI has given priority to financial stability and economic growth while firmly underlining that it is ready to act if its reading changes at any time. Further, through a soothing commentary, the central bank seems to have sent positive signals to almost all sections of the economy. Though headwinds like higher crude prices, a sketchy monsoon, and further deterioration in the global financial system are being anticipated, for the moment, India’s key economic growth indicators seem to be positive and manageable. While we expect another hike to be delayed at least for another 2-3 quarters, the RBI will be guided by the cumulative effect of all precious hikes," said Virat Diwanji, Group President & Head- Consumer Bank, Kotak Mahindra Bank
Rupee slips 2 paise to 81.92 against Dollar post-RBI policy decision
The rupee pared initial losses and settled 2 paise lower at 81.92 (provisional) against the US dollar on Thursday after the RBI decided to keep the key benchmark policy rate at 6.5 per cent.
At the interbank foreign exchange, the domestic unit opened weak at 81.95 against the dollar, and finally ended the day at 81.92 (provisional), 2 paise lower from its previous close. On Wednesday, the rupee gained 42 paise to close at 81.90 against the US dollar.
On the rupee, Reserve Bank Governor Shaktikanta Das said the Indian Rupee has moved in an orderly manner in the calendar year 2022 and continues to be so in 2023 also.
‘Confidence posed by the RBI in the healthy growth showcased by the Indian banking and non-banking institutions’
“On a surprising note, the MPC has kept the repo rate unchanged to 6.50%, while keeping its stance on withdrawal of accommodation maintained. While the Indian economy remains resilient, the RBI lowered the GDP growth projection for 2023-24 to 6.5% and we remain cognizant about the risks posed to growth by geopolitical tensions and global financial market volatility. However, we are glad to witness the confidence posed by the RBI in the healthy growth showcased by the Indian banking and non-banking institutions. Further, positive indicative factors like higher rabi production brightening prospects about agriculture sector, positive rural demand, resilience in urban demand continue to boost our confidence that it will positively impact the gold loan demand in the country," said George Alexander Muthoot, MD, Muthoot Finance
"To enhance efficiency of regulatory processes, RBI has decided to develop a secured web based centralised portal named as ‘PRAVAAH’, this will go a long way to enhance the efficiency of regulatory processes and make it easier for various institutions to obtain licenses/authorizations and seek regulatory approvals from the RBI under various statutes/regulations. Besides such measures from the RBI will go a long way to strengthen the financial system, reduce cost of compliance and ease of doing business," he added.
'Core inflation remains sticky, macro-economic challenges continue'
In February, the Reserve Bank had hiked repo rate by 25 bps. After the RBI Monetary Policy in Feb, George Alexander Muthoot, MD, Muthoot Finance had said, “The RBI hiked repo rate by 25 bps today and maintained its stance of ‘withdrawal of accommodation’, this was largely on expected lines and also in line with consensus expectations. The macro-economic challenges still continue and core inflation remains sticky. However, the resilience of the Indian economy, firming up of urban consumption demand and improving rural demand reinforce our optimism on the growth front and we expect steady demand for gold loans. Further, given the various measures announced in the Union Budget recently, including the rise in capex by 33 percent, demand is further expected to increase. RBI measures to expand the scope of TReDS will improve the cash flows to MSMEs, this coupled with recent announcement in the budget towards the MSMEs will surely give support to MSME sector which were most impacted during the pandemic. We do believe that the large part of the RBI rate hike cycle is behind us, unless inflation flares up unexpectedly. Our borrowing cost may rise slightly going ahead but we are confident of maintaining our margins at the current levels."
India Inc cheers RBI stance to hold interest rate
India Inc cheered the central bank's stance to hold key interest rate today, terming it a "prudent" move in the wake of headwinds emanating from global banking stress and said the move will improve business sentiments by containing the rise in borrowing costs. Industry bodies cautioned that any further hike in the benchmark repo rate at this juncture would have affected the country's economic growth even as domestic demand impulses remain healthy.
RBI may pause on rate hikes at next meet also: ICICI PD's Prasanna
The RBI's decision to keep interest rates unchanged, after a nearly year-long hiking cycle, may extend even though the central bank described its move as a pause and not a pivot, said one of the few analysts who predicted the surprise decision.
A Prasanna, head of research at ICICI Securities Primary Dealership, was in the minority of analysts that had expected the RBI to pause rate hikes at its meeting on Thursday.
"By the next meeting (in June), if inflation data is in line or slightly better and globally, if we get an indication that the US Federal Reserve is done with hikes, then, I think, their (RBI's) conviction will also grow," said Prasanna.
"So, then that pause can get extended in the next meeting," he added.
RBI Guv Das pledged to hike interest rate again if needed
Das pledged to hike interest rate again if needed, saying the decision to pause was "for this meeting only". The RBI Governor reminded that central bank's target is to get headline inflation to 4 per cent from the 6 per cent levels at present, and the monetary policy will be working towards progressively aligning with the target.
RBI's policy priority continues to be price stability
RBI Governor Shaktikanta Das said the job to decisively bring down inflation is "not yet finished", and RBI's policy priority continues to be price stability. RBI is keen to assess the cumulative impact of the rate actions done till now, he said. There has been a cumulative hike of 250 basis points since May last year.
‘Window for rate hikes has closed’
Market participants do not expect the central bank to go for further rate hikes as that would shift focus to weakening growth in the current year. "We believe the window for hikes has closed. As such, we no longer expect any further rate hikes from the MPC in FY24," said Rahul Bajoria, India economist at Barclays.
India's short-end bond yields to fall further after RBI's surprise pause
India's shorter duration government bond yields could fall further, several analysts said on Thursday, as most market participants do not foresee any more rate hikes by the Reserve Bank of India in 2023.
"The two-year to five-year bond yields will continue to ease further in the near term," said Vijay Sharma, senior executive vice president at PNB Gilts.
"There is no reason that the five-year bond yield should be above 7%, and should find value below that level."
Highlights of RBI's monetary policy statement
The RBI monetary policy committee (MPC) decided to keep the policy repo rate unchanged at 6.50 percent and other policy rates were also kept unchanged. Governor Shaktikanta Das said that the withdrawal of accommodation and that the repo rate hike has been paused only for this meeting. Read full report here
Nifty Bank slips in red
Market off highs, Nifty Bank slips in red after sliding more than 300 points from intraday high after the RBI kept repo rates unchanged.
Atul Monga on RBI's decision
Atul Monga, Founder and CEO of Basic Home Loan said -
The RBI MPC decision to keep a pause on rate hike is positive for the housing market as it reduces the uncertainty and volatility associated with interest rate fluctuations. The home loan interest rates have gone up from 6.5 per cent to around 8.75 per cent with a series of rate hikes in the past and the move to pause will give a temporary reprieve and support the existing growth momentum in the real estate sector.
It wil therefore help boost the housing sales especially in the affordable and mid-housing segment and encourage more people to invest in residential properties, as they have a clearer picture of their borrowing costs and can plan their finances accordingly.
‘RBI has taken a good call, I think’
"RBI has taken a good call, I think": Finance Minister Nirmala Sitharaman on decision to keep benchmark rate unchanged.
RBI to develop web portal for public to search unclaimed deposits across banks
The RBI said a centralised portal will be developed to access details of unclaimed deposits by depositors or their beneficiaries across various banks. About ₹35,000 crore unclaimed deposits as of February 2023 were transferred to RBI by public sector banks (PSBs) in respect of deposits which were not operated for 10 years or more.
Real estate stocks surge
Shares of Real estate companies recovered from opening lows and traded with gains after RBI's Monetary Policy Committee kept policy interest rates unchanged, contrary to market expectations of a 25 basis points hike.
Asian FX, stocks weighed by recession fears; Indian rupee gains
Most Asian currencies and stocks stayed on the back foot on Thursday, as investors took flight to safe-haven assets due to prospects of an imminent global recession. Trading was somewhat muted in the run-up to Easter holidays in some major markets. In China, Asia's largest economy, and Taiwan, trading resumed after a public holiday. The South Korean won was the biggest loser, depreciating nearly 0.7%. This was closely followed by the Taiwan dollar which fell as much 0.3% Other currencies, such as the Singapore dollar, the Malaysian ringgit, and the Chinese yuan fell between 0.1% and 0.2%.
RBI proposes to make credit bureaus more accountable
The RBI proposed making the country's credit bureaus more accountable by strengthening the grievance redressal system via measures such as alerting customers when their credit report is accessed and compensation for delayed or altered reports.
'RBI decision augurs well for growth'
Anant Singhania, President, IMC Chamber of Commerce and Industry said, "The unanimous verdict of the RBI Monetary Policy keeping the repo rate unchanged augurs well for growth and helping India to be the leader in global growth, with a 6.5% estimate. The Governor has however rightly cautioned that global inflation and the impact of war would have to be closely watched and has signalled that RBI will act quickly if price stability or financial stability is threatened. The announcement that pre sanctioned credit lines can be availed from banks through UPI which is a very bold and innovative step bolstering the digital ecosystem. Overall, the Governor and the RBI deserve kudos for a very positive and bold policy."
Indian banking system remains strong, healthy
"As of now, the Indian banking system remains strong and healthy. The Governor has said it is an evolving situation and we are living in uncertain times. But I would like to add that prudential regulations are applied uniformly for Indian commercial banks irrespective of their size," he says.
Premiums fall, rupee choppy
Rupee moved in a narrow band, while forward premiums declined on Thursday after the Reserve Bank of India (RBI) surprised markets by holding rates steady.
The rupee traded up 0.04% at 81.97 per U.S. dollar by 11:25 a.m. IST, having declined up to 82.0525 immediately after the RBI announced its decision. The currency has held a 15 paisa range so far in the session.
The USD/INR 1-year annualised forward premium tumbled to 2.49%, from 2.60% ahead of the policy decision. The March forward premium declined to 1.930 rupees, from 2.01 rupees.
'MPC remains watchful'
Governor Das gave his first monetary policy address for the new financial year FY24. "The MPC remains watchful and will not hesitate to take further action in its future meetings, as and when necessary. So, the job is not finished," Das said.
Mahindra Group Chief Economist on RBI's policy decision
Dr Sachchidanand Shukla, Chief Economist - Mahindra Group said, “The Governor and the RBI have shown a better grasp of the daunting global backdrop mired with financial stability risks and clearly discretion is better part of valor. The growth and inflation estimates are reasonable and do not warrant any knee-jerk reaction and its stand on liquidity also is extremely practical and contingent on the underlying macro backdrop."
'Non-committal pause, but pause for good'
Madhavi Arora, Lead Economist, Emkay Global Financial Services on RBI MPC announcement -
The unchanged policy rate and stance has been met by non-committal forward guidance, clearly giving more stress to fluid and uncertain global situation, implying macro assessments might require appropriate adjustments ahead from the policy perspective. However, the Governor stressed that their inflation fight is not over and we are still away from durable disinflation with unyielding core inflation still a concern.
We believe the fear that “speed can kill" has led to dovish turn from a number of central banks in both DMs & EMs, amid growing concerns over transmission of policy tightening to growth and the same rub-off is happening in RBI’s reaction function.
The anticipation of near-ending rate cycle in the West (and quick policy reversal), and the need to assess monetary-policy lags of the hikes so far has played a dominant role in RBI’s reaction function than the recent inflation misses. We see FY24 average headline/core inflation at 5.2%/ 5%.
Besides, the material improvement in external sector outlook amid easing trade deficit and services exports surge, has implied support for INR from the current account side and given some breather to RBI as well on rates stance (we see FY24 CAD/GDP at 1.9%).
We think it appears to be a pause for good especially as the ex-ante real rates looking around 1.1% -- keeping our one-year forward inflation forecast as anchor, giving them comfort and flexibility on their supposed stance and actions ahead.
RBI expansion of NDF access to help manage rupee volatility
The RBI said it is proposing to permit banks with IFSC banking units to offer non-deliverable forex derivative contracts involving the rupee to resident users in the onshore market. An IFSC Banking Unit or "IBU" is a bank permitted by the Reserve Bank of India to operate from an International Financial Services Centre (IFSC).
Markets bounce back post RBI policy decision
Equity benchmark indices recovered early lost ground and were trading in the positive territory in Thursday mid morning trade after RBI kept the repo rate unchanged at 6.5 per cent even as inflation is trending above its tolerance level.
Bouncing back from early fall, the 30-share BSE Sensex climbed 176.91 points to 59,866.22 after the RBI policy announcement. The broader NSE Nifty also gained 44.2 points to 17,601.25 after falling in initial trade.
‘Realty sector was hoping for a pause’
Ram Raheja, Managing Director at S Raheja Realty said, “RBI's prudent choice to hold off on raising rates is a welcome move after consistent raise in repo rate in the last few cycles. The realty sector was hoping for a pause as the cost of construction has been consistent. The consumer sentiment within the residential real estate segment will witness a further uptick. While the industry has been witnessing growing demand, further hike in rates could dampen the deal within few segments. Luxury homes will see even better demand with this move as it will give high-ticket buyers and investors increased confidence and incentive to buy."
On banking sector
Divam Sharma- Founder at Green Portfolio PMS said, "Banking sector will witness some short-term relief rallies as the global banking crisis fears wane. Now on a macro level, we could see FPI’s unwinding short-sell position over the coming months. Subsequently, we should also start seeing FPI money flowing back to Indian markets as the US fed rates peak and rate cuts get priced into the markets. The RBI mentioned the stability of the Indian rupee as a focus area along with a relatively bullish current account deficit forecast for FY24 – this bodes well for our currency. Secondly, let’s not forget that the RBI now sits on a comfortable USD 600 Billion+ forex reserves despite the fall in US treasuries."
Rate pause without change in stance: Uday Kotak
Uday Kotak said, “Focus on Financial Stability. Rate pause without change in stance. Global banking fragility on every Central Bank’s mind in this viral digital world. While Indian financial system is in good shape, let’s 'be not slack and be diligent'!"
Shares reversed early losses
Indian shares reversed early losses today, after the RBI kept key policy rates unchanged "to assess the progress made so far" in tackling inflation. The Nifty 50 was up 0.30% at 17,610.20 as of 11:01 am, while the S&P BSE Sensex rose 0.32% to 59,882.93. Both the benchmarks had fallen 0.3% ahead of the RBI's rate decision.
ICRA Chief Economist on RBI's policy decision
On the MPC Repo rate decision, Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA Ltd said, "Financial stability concerns appear to have pre-empted a pause as the MPC assesses the impact of its cumulative 250 bps of rate hikes. If inflation does not fall in line with the MPC's assessment for Q1 FY2024, another hike could be in the offing, especially if the financial stability situation stabilises."
RBI to allow operations of pre-sanctioned credit lines via UPI
RBI governor Shaktikanta Das has proposed to expand scope of United Payments Interface (UPI) by permitting operations of pre-sanctioned credit lines by banks through UPI. This initiative will encourage innovations, he said while announcing the bi-monthly monetary policy.
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
The RBI MPC surprised with a pause on Thursday but emphasised that the path ahead will be nimble to address evolving inflationary risks and maintained its hawkish stance. Tone on growth was upbeat, validated by a small upward revision to the FY24 growth target. Oil projection was cut, besides factoring in the assumption of a normal monsoon. With policymakers highlighting risks to global financial stability, the tightening cycle has likely slipped into an extended pause, barring unexpected shocks. Beyond anchoring inflationary expectations, the impact of tighter monetary policy on supply-side shocks, especially poor weather conditions, is limited, instead requiring administrative measures and fiscal support.
RBI keeps door open for more hikes
The central bank said its policy stance remains focused on "withdrawal of accommodation", signalling it could consider further rate hikes if necessary. The pause in rate hikes is "for this meeting only", said RBI Governor Shaktikanta Das.
Indian shares reversed early losses on Thursday, after the Reserve Bank of India kept key policy rates unchanged "to assess the progress made so far" in tackling inflation. The Nifty 50 was up 0.15% at 17,582.95 as of 10:14 a.m. IST, while the S&P BSE Sensex rose 0.18% to 59,795.93. Both the benchmarks had fallen 0.3% ahead of the RBI's rate decision.
Sonam Srivastava on RBI's decision
“The RBI Governor's announcement regarding the projection of inflation and GDP growth for FY24 shows a cautious approach towards the country's economic recovery. The focus on the gradual and sustainable ‘withdrawal of accommodation’ is essential for ensuring that the current growth momentum is maintained in the long run. 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 at Wright Research- an investment advisory firm.
Rupee falls below 82/USD
The rupee declined against the US dollar after the RBI unexpectedly kept the repo rate unchanged. The rupee declined to an intraday low of at 82.06 per US dollar versus 81.88 before the RBI policy announcement.
GDP growth projection for FY24
RBI marginally raises GDP growth projection for FY24 to 6.5 per cent from earlier estimate of 6.4 per cent.
RBI MPC meet: Key points
- Core inflation remains sticky
- Policy decisions taken since May 2022 are still working through the system
- Banking and non-banking financial system remains healthy
India bond yields crash as RBI keeps rates unchanged
India government bond yields dropped today, with the benchmark bond yield crashing to its lowest in nearly seven months after the RBI maintained status quo on policy rates. The 10-year benchmark bond yield dropped to 7.1469%, its lowest since Sept. 15, immediately after the policy decision. It was ay 7.2857% before the decision. Yields however were off their day's low, after Governor Das said the pause in rates was for this policy meeting only.
Nifty, Sensex trade in the green with marginal gains after RBI decided to hit the pause button on rate hikes.
GDP grew 7% in FY23
Governor Das said that the GDP grew 7 per cent in 2022-23, indicating the economic conditions were resilient.
On global economy
Global economy facing renewed phase of turbulence, says RBI Governor Shaktikanta Das.
‘Unprecedented uncertainties in geopolitics and economy’
“We are witnessing unprecedented uncertainties in geopolitics and economy," said Governor Das.
RBI to remain focused on withdrawal of monetary policy accommodation
RBI to remain focused on withdrawal of monetary policy accommodation, says Governor Das.
RBI MPC Meet LIVE
2023 began on a good note, says RBI Governor Das.
RBI keeps repo rate unchanged at 6.50%
With inflation continuing to remain sticky, the RBI on Thursday decided to keep repo rate unchaged. The central bank has already increased repo rate by a total of 250 bps since May 2022.
Equity benchmark indices declined in early trade on Thursday as investors remained cautious ahead of the Reserve Bank of India's monetary policy review and weak trend in global markets. The 30-share BSE Sensex fell 165.16 points to 59,524.15 after a weak beginning. The broader NSE Nifty declined 45.5 points to 17,511.55.
RBI MPC meet: When, Where & How to watch
The RBI's Monetary Policy Committee meeting will conclude, and the decision will be announced by RBI Governor Shaktikanta Das on Thursday. Read full report here
Rupee stronger than 82/USD ahead of RBI rate decision
The rupee was on the stronger side of 82 per US dollar with mild gains today ahead of the RBI's monetary policy decision. The rupee traded at 81.9075 per dollar by 9:27 am, compared to its previous close of 82.
Bond yields little changed before RBI policy decision
Indian government bond yields were largely unchanged early today, as market participants awaited the RBI's monetary policy decision as well as guidance on the interest rate trajectory. The 10-year benchmark 7.26% 2032 bond yield was at 7.2850% as of 9:35 am, after closing at 7.2750% on Wednesday.
Eight of the 13 major sectoral indexes declined, with the heavyweight financials and information technology (IT) sectors shedding 0.3% and 0.5%, respectively.
Among individual stocks, Equitas Small Finance Bank rose over 2% after reporting a 36% YoY jump in gross advances for the March quarter.
Experts view on RBI rate hike
Experts are of the view that the RBI will raise the key policy rate (repo) by 25 basis points today, and it would probably be the last in the current monetary policy tightening cycle that began in May. The RBI has so far raised repo rate six times including the off-cycle surprise increase of 40 basis points in May 2022.
Indices open lower ahead RBI policy
Indian shares opened on Thursday with Nifty around 17500. At 9:16 am, the Sensex was down 123.63 points or 0.21 per cent at 59,565.68, and the Nifty was down 31.40 points or 0.18 per cent at 17,525.60.
How markets are positioned into the RBI decision
India’s offshore swap curve beyond April and up to the nine-month segment is very flat, which points to market expectations for peaking of the policy rate after a hike in April, said Jennifer Kusuma, a senior Asia rates strategist at Australia & New Zealand Banking Group Ltd. in Singapore. Any rate-cut expectations beyond this point appear to be minimal, she said.
Policy decisions this week
Policy decisions this week from some of the Reserve Bank of India’s global peers offer a good reason for the split. While Australia’s central bank bolstered the case for global doves by calling a halt to its tightening cycle, its New Zealand counterpart emboldened hawks by opting for a larger-than-expected hike.
RBI Monetary Policy Committee meet: When, Where and How to watch Shaktikanta Das live
The monetary policy statement, which will be presented at 10 am on the same day, will include the decision on the repo rate hike, reverser repo rate, and other related decisions. Read more
Indian rupee to cling to 82/USD ahead of RBI's rate decision
The Indian rupee is likely to open little-changed against the U.S. dollar on Thursday amid losses in Asian peers and as traders await the Reserve Bank of India's policy decision.
Non-deliverable forwards indicated the rupee will open at around Wednesday's level of 82 to the dollar or a tad higher. The local currency managed to climb past the psychological 82 level on Wednesday, reaching an over-three-week high of 81.90.
India bond yields seen little changed before RBI policy decision
Indian government bond yields are expected to be little changed in the early session on Thursday, as market participants await the Reserve Bank of India's monetary policy decision and commentary.
The 10-year benchmark 7.26% 2032 bond yield is expected to be in the 7.26 to 7.30% range till the policy decision, after closing at 7.2750% on Wednesday. India's financial markets will remain shut on Friday.
Investors will also watch for commentary on RBI's policy stance and future hikes
"The RBI will hold on to its 'withdrawal of accommodation' stance. A change to neutral at a time of global volatility and no clear signs of slowing inflation momentum could be risky", said Pranjul Bhandari, Chief Economist India at HSBC Securities and Capital Markets
Indian shares set to open lower ahead of RBI policy decision
Indian shares are poised to open lower on Thursday, ahead of what many expect to be the Reserve Bank of India's final interest rate hike in the current cycle. India's NSE stock futures listed on the Singapore exchange were down 0.12% at 17,603 as of 7:59 a.m. IST.
Live address of RBI governor Shaktikanta Das on YouTube
A large majority of economists, 49 of 62, said the Reserve Bank of India (RBI) would lift its repo rate by 25 basis points to a seven-year high of 6.75% at the conclusion of its three-day meeting on April 6. The central bank has already raised rates by 250 basis points since May last year.
Core inflation, which excludes volatile food and energy components, was also expected to have stayed high between 6.05%-6.12% in February, according to estimates from economists.
Banking system liquidity
Banking system liquidity has improved in recent days after having been in deficit towards the end of March. Liquidity surplus stood at 2.11 trillion rupees on Wednesday, its highest since Sept. 5 and more than double the 1.04 trillion rupees surplus in the previous session.
Hike of 250 basis points since May 2022
The central bank has already increased repo rate by a total of 250 basis points since May in a bid to contain inflation, though it has continued to remain above the RBI's comfort zone of 6 per cent most of the time.
Need for another rate hike
The need for another rate hike is driven by elevated level of core inflation which has remained near or above 6% since middle of 2021," said Gaura Sen Gupta, an economist with IDFC FIRST Bank.
Will RBI maintain its 'withdrawal of accommodation' stance
The Reuters Poll showed that a majority of respondents, 20 of 36, expect the central bank would maintain its 'withdrawal of accommodation' stance while the remaining 16 said it would shift to neutral.
Unseasonal rains could keep food prices high
Unseasonal rains could keep food prices high and a surprise decision by OPEC and its allies to cut output recently has also pushed up oil prices which could add to imported inflation.Unseasonal rains could keep food prices high and a surprise decision by OPEC and its allies to cut output recently has also pushed up oil prices which could add to imported inflation.
Retail inflation above RBI's mandated target
Retail inflation rose 6.44% year-on-year in February, easing from 6.52% in January but has remained above the central bank's mandated target range of 2%-6% for 10 out of the last 12 readings.
RBI set to raise rates 25 bps on elevated inflation, keep hawkish stance
India's central bank is widely expected to raise its benchmark rate on Thursday for the seventh consecutive meeting and leave the door open for more increases to bring inflation back within its target range, economists said.
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