RBI Governor Highlights: RBI hikes rates by 40 basis points in an unscheduled meet, attempts to tame inflation

RBI Governor Shaktikanta Das talks about global growth amid growing inflation worries.

RBI Governor Live
Shaktikanta Das will address the media soon. (Image: REUTERS)

RBI Governor Highlights: Reserve Bank of India governor Shaktikanta Das today said that the Monetary Policy Committee (MPC) met in an off-cycle meet and voted unanimously to hike the policy repo rate by 40 basis points, taking it to 4.40%. He added that global inflation is expected to remain high in April and RBI’s policy actions are an attempt to curb inflation and maintain growth. He added that MPC decided to hike the Cash Reserve Ratio (CRR) by 50 basis points to 4.5%. CPI inflation climbed to 6.95 per cent in March while WPI (wholesale price index) inflation touched 14.55 per cent in the same month. Economists and market experts have pointed out that the central bank needs to hike rates by 50 basis points in the upcoming June monetary policy meeting. Shaktikanta Das’ decision comes just ahead of the US Federal Reserve policy meeting, where the Jerome Powell-led FOMC is expected to initiate the rate hike cycle. 

Live Updates
15:24 (IST) 4 May 2022
RBI is not adhering to any defined playbook

“The governor today clearly laid out the rationale for hiking policy rates with this inter-meeting move, saying the RBI is not adhering to any defined playbook, and the move was a response to heightened uncertainty in the global macro backdrop. The 40bp rate hike today was not a shift in policy accommodation, the governor said; the stance and policy conditions remain accommodative. The rate increase merely reversed the 40bp repo cut delivered in May 2020,” said Rahul Bajoria, MD & Chief India Economist, Barclays

15:18 (IST) 4 May 2022
CRR hike will will immediately take of Rs 87000 crores as liquidity and more in 5- 6 months

“RBI hikes rates by 40 basis point increase the SDF rate to 4.15% and Repo rate to 4.40%. It also hiked the CRR by 50 basis point which will immediately take of Rs. 87000 crores as liquidity and about 2.00 lac crore due to multiplier effect in the next 5- 6 months. USDINR gained immediately upto 76.21 due to this rate hike while equity markets fell after the announcement by RBI. The dollar index still on the higher side at 103.43 and with today's FED meet should remain higher. So we do not expect rupee to appreciate much due to this rate hike and expect it to remain in a range of 76-76.70 in the next 1 month. Have to watch what FED says tonight,” said Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors

15:03 (IST) 4 May 2022
10-year bond yield has spiked to above 7.39%

“The MPC's decision, in an unscheduled meeting, to raise the repo rate by 40bp and CRR by 50 bp is a surprise since it came on the LIC IPO opening date. MPC's proactive move is justified from the perspective of inflation management, but the timing leaves a lot to be desired. The above 1000 point crash in Sensex has soured the sentiments on the opening day of India's largest IPO. The 10-year bond yield has spiked to above 7.39% indicating an imminent rise in the cost of funds,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

15:02 (IST) 4 May 2022
RBI MPC meeting schedule

After having hiked rates in an off-cycle meeting this week, the MPC members will meet again between June 6-8.

14:59 (IST) 4 May 2022
More hikes expected

By the end of the year, we could be back at 5.15% policy rate, said Upasna Bhardwaj, Economist, Kotak Mahindra Bank in an interview with CNBCTV18.

14:57 (IST) 4 May 2022
Focus on strengthening growth

RBI Governor said that sustained high inflation inevitably hurts savings, investment, competitiveness and output growth. “I would, therefore, like to emphasise that our monetary policy actions today – aimed at lowering inflation and anchoring inflation expectations – will strengthen and consolidate the medium-term growth prospects of the economy,” he added.

14:51 (IST) 4 May 2022
2 years on, RBI reverses path

RBI Governor Shaktikanta Das recalled that MPC reduced policy rates by 75 basis points on March 27, 2020 followed by another reduction of 40 basis points on May 22, 2020. “Accordingly, the decision of the MPC today to raise the policy repo rate by 40 bps to 4.40 per cent may be seen as a reversal of the rate action of May 22, 2020 in keeping with the announced stance of withdrawal of accommodation set out in April 2022,” he added.

14:43 (IST) 4 May 2022
Persistence of food price pressures

The sharp acceleration in headline CPI inflation in March 2022 to 7 per cent was propelled, in particular, by food inflation due to the impact of adverse spillovers from unprecedented high global food prices. Nine out of the twelve food sub-groups registered an increase in inflation in March. High frequency price indicators for April indicate the persistence of food price pressures. Simultaneously, the direct impact of the increases in domestic pump prices of petroleum products – beginning the second fortnight of March – is feeding into core inflation prints and is expected to have intensified in April,” RBI Governor Shaktikanta Das said.

14:41 (IST) 4 May 2022
RBI getting ahead of the curve

RBI Governor Das said that the normalisation of monetary policy in major advanced economies is now expected to gain pace significantly — both in terms of rate increases and unwinding of quantitative easing as well as rollout of quantitative tightening. “These developments would have ominous implications for emerging economies, including India,” he said.

14:40 (IST) 4 May 2022
Change in SDF and MSF

The standing deposit facility (SDF) rate stands adjusted to 4.15 per cent; and the marginal standing facility (MSF) rate and the Bank Rate to 4.65 per cent

14:37 (IST) 4 May 2022
CRR hike to result in massive liquidity withdrawal

CRR hike may result in withdrawal of liquidity worth Rs 87,000 crore. CRR hiked by 50 basis points.

14:33 (IST) 4 May 2022
CRR to be hiked from May 21

RBI Governor Das said that CRR will be hiked by 50 basis points to 4.5% from May 21.

14:32 (IST) 4 May 2022
Important to tame inflation

Inflation must be tamed to keep the Indian economy resolute, said RBI Governor Shaktikanta Das. He added that efforts to maintain price stability would help financial and macroeconomic stability.

14:28 (IST) 4 May 2022
Growth positive

Policy decisions of today are aimed at re-anchoring inflation expectation and will eventually result in the strengthening of growth prospects, said RBI Governor Shaktikanta Das. He added that MPC decision growth is positive.

14:27 (IST) 4 May 2022
CRR raised

RBI decided to increase cash reserve ratio (CRR) by 50 bps to 4.5%, said RBI Governor Shaktikanta Das.

14:25 (IST) 4 May 2022
Pandemic softening

Headroom of re-anchoring of inflation has become possible with the pullback in pandemic scale, said RBI Governor Shaktikanta Das. He added that liquidity needs to be modulated in line with policy actions.

14:22 (IST) 4 May 2022
Rate reversal

Today's rate action may be seen as a reversal of the rate action announced in May 2020, said RBI Governor Shaktikanta Das.

14:21 (IST) 4 May 2022
Rise in input costs

Risks of input cost pressure, are promoting another round of rise in prices said RBI Governor Shaktikanta Das. he highlighted that rise in prices would weigh on inflation.

14:19 (IST) 4 May 2022
Petrol price pinches

Petrol prices feeding into inflation print said RBI Governor Shaktikanta Das. He added that the same is expected to have been accentuated in April.

14:17 (IST) 4 May 2022
Private consumption gaining traction

Private consumption is regaining traction, said RBI Governor. He added that agricultural prospects are better with a forecast of normal monsoon.

14:16 (IST) 4 May 2022
Still accomadative

To remain accommodative but focus on withdrawal of accommodative stance RBI Governor Shaktikanta Das said.

14:15 (IST) 4 May 2022
Rates hiked

SDF now stands at 4.15% said RBI Governor Shaktikanta Das.

14:14 (IST) 4 May 2022
Rate hike cycle kicks in

Normalisation in major advanced economies is expected to gain pace significantly, said RBI Governor Shaktikanta Das. He added that this would be in terms of rate increase and QE and tightening.

14:13 (IST) 4 May 2022
Food price on rise

Edible oil shortage owing to Europe conflict and ban by exporter, said RBI Governor Shaktikanta Das.

14:12 (IST) 4 May 2022
Inflation on watch

RBI Governor Shaktikanta Das said that geopolitical tensions are forcing inflation higher in major economies. He added that crude oil price is volatile and above $100 per barrel.

14:08 (IST) 4 May 2022
RBI hikes interest rate

RBI Governor Shaktikanta Das said that the MPC has unanimously decided to hike interest rate by 40 bps to 4.40%

14:08 (IST) 4 May 2022
RBI MPC off-cycle

RBI Governor Shaktikanta Das said that RBI MPC met off-cycle to assess the global growth.

14:06 (IST) 4 May 2022
Talking IMF

RBI Governor Shaktikanta Das quotes IMF, which says the effect of the Russia-Ukraine war spreading throughout the globe.

14:05 (IST) 4 May 2022
Helping the economy

RBI Governor Shaktikanta Das says RBI and MPC helping the Indian economy to navigate through the current geopolitical crisis. He highlighted that global growth seems to be losing pace.

14:04 (IST) 4 May 2022
Supporting growth

By remaining accommodative monetary policy is supporting growth, said RBI Governor Shaktikanta Das. He added that the Indian economy has managed to steer through the storm so far.

14:02 (IST) 4 May 2022
RBI Governor’s statement begins

RBI Governor Shaktikanta Das has started his unscheduled addrress.

14:00 (IST) 4 May 2022
Sensex, Nifty deep in red ahead of RBI statement

Sensex and Nifty were sitting deep in the red with losses just ahead of RBI Governor Shaktikanta Das' statement.

13:56 (IST) 4 May 2022
RBI Governor statement soon

RBI Governor Shaktikanta Das will make a statement soon. The statement comes just ahead of the US Fed meet later today.

13:45 (IST) 4 May 2022
Incremental credit-to-GDP share likely to breach 50% mark in FY23, says report

The share of incremental bank credit in incremental nominal GDP is likely to cross the 50 per cent mark in the current financial year, from a decade low of 27 per cent in FY2022, an SBI research report said on Monday.     

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13:31 (IST) 4 May 2022
Prioritising and anchoring inflation

While the risks to domestic growth call for continued accommodative monetary policy, inflationary pressures necessitate monetary policy action. The circumstances warrant prioritising inflation and anchoring of inflation expectations in the sequence of objectives to safeguard macroeconomic and financial stability, while being mindful of the ongoing growth recovery,” RBI Governor Das said in the last MPC meet.

13:23 (IST) 4 May 2022
Focus moving towards inflation

The MPC turned markedly hawkish in its April policy statement, stating that it would remain accommodative with a focus on the withdrawal of accommodation. Hiking the inflation projection for FY23 to 5.7% from 4.5% and cutting the same for growth to 7.2% from 7.8%, Reserve Bank of India (RBI) governor Shaktikanta Das made it clear that inflation is now a bigger priority than growth.

13:14 (IST) 4 May 2022
Stock markets wait with bated breath

Ahead of RBI Governor Shaktikanta Das' address, domestic headline indices were down in the red. Market analysts to expect a rate hike in the next policy meeting.

13:11 (IST) 4 May 2022
March inflation report card: CPI at 17-month high, WPI touches 4-month high

According to latest inflation readings, the Wholesale Price Index (WPI) inflation touched 14.55 per cent 14.55% in March, a four-month high, while the Consumer Price Index (CPI) inflation spiked to 6.95 per cent in March to a 17-month high.

13:08 (IST) 4 May 2022
RBI gives nod for appointment of Rajiv Ranjan as MPC ex-officio member

The central board of the Reserve Bank of India (RBI) on Monday approved the appointment of executive director Rajiv Ranjan as an ex-officio member of the Monetary Policy Committee (MPC). Ranjan will be succeeding Mridul Saggar, who is understood to have retired.

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13:06 (IST) 4 May 2022
Indian economy not immune to global conditions: RBI

As the war in Ukraine continues to vex the global supply chain and inflate prices of goods and commodities, the Indian economy is not expected to remain immune from the negative global conditions, the Reserve Bank of India said in a report last month. India is facing high inflation, widening trade deficit and foreign portfolio investment outflow, the central bank added. These conditions are expected to hamper growth and lead to ‘rocketing inflation’.

13:02 (IST) 4 May 2022
Stellar FY22 exports driven by petroleum, farm, metals

Farm exports were driven by a 273% surge in wheat exports to $2.1 billion, 27% rise in non-basmati shipments to $6.1 billion, showed the commerce ministry data. The chemicals segment recorded a 17% rise on higher shipments of agro, inorganic and organic chemicals, although bulk drugs and formulations exports barely grew, partly due to export curbs on select items.

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13:01 (IST) 4 May 2022
Trade deficit widens in April: Where are India’s trade deficit, rupee headed in FY23? experts answer

India’s trade deficit widened in the first month of fiscal year 2023 to $20.07 billion, an increase of over 30 per cent from last year. India reported an increase in both exports and imports of goods in April in comparison to last year, however, the merchandise exports and imports fell month-on-month. Experts see the ongoing Russia-Ukraine war and US Federal Reserve’s monetary policy tightening measures to continue to put pressure on India’s current account and on rupee’s value. Barclays says it expects the trade deficit to widen to $250 bln in FY 2023, which would be the largest goods trade deficit on record. Kotak Institutional Equities expect the rupee to remain under pressure this year.

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12:59 (IST) 4 May 2022
RBI announcement comes ahead of expected US Fed rate hike

The Reserve Bank of India Governor's statement comes ahead of expected US Federal Reserve rate hike cycle. The market is expecting US Fed to hike interest rates by 50 basis points on Wednesday when chair Jerome Powell announces the policy statement. Investors and market participants also expect the Fed to announce its plans to reduce the size of its $8.9 trillion balance sheet.