RBI Monetary Policy Meet December 2017: The Reserve Bank of India kept the repo rate unchanged on Wednesday at 6% in its latest credit and monetary policy review, as was widely expected given the concerns on the rising headline inflation and firm global crude oil prices. The RBI’s 6% repo rate, last revised in August, is lowest in seven years since November 2010. “On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.0 per cent,” the central bank said in its policy statement.
The central bank had reduced the benchmark lending rate by 0.25 percentage points to 6% in August, bringing it to a 6-year low, however, kept it unchanged in October. The Consumer Price Index (CPI) for October had accelerated to a seven-month high of 3.5% from a year ago, even as a Reuter poll of 26 economists showed that there are expectations that inflation will breach its 4% target in the next few months.
Here are live updates from RBI December Monetary Policy Statement for 2017-18:
3.19 pm: Expect GVA growth of 7-7.8% for Q3 and Q4, says RBI.
3.17 pm: Rupee weakened to 54.51 per dollar from around 64.47, while the broader NSE share index was down 0.8% for the day.
3.15 pm: India’s benchmark 10-year bond yield fell 2 basis points to 7.05 percent from around 7.07 percent before the policy decision.
3.13 pm: Urjit Patel stressed that the recapitalisation would be accompanied with a reform package to ensure the problems do not recur.
3.12 pm: Sunil Srivastava, Deputy MD of SBI says he is in favour of the RBI’s neutral stance.
3.10 pm: The MPC notes that the evolving trajectory needs to be carefully monitored, says RBI.
3.06 pm: RBI raised the inflation forecast for the remainder of the current financial year to 4.3-4.7%.
3.04 pm: RBI says change in the narrative of divergence in bad loans due to transparency, denies changing goal post.
3.01 pm: Use of POS has significantly increased: Urjit Patel
3.00 pm: Linking of bank accounts with Aadhaar can be completed by the end of the year: Urjit Patel
2.58 pm: RBI says it has decided to rationalise charges on Debit card transactions to give a further fillip to digital payments.
2.50 pm: There is a risk that upward trajectory in inflation may continue in the near-term, says RBI
2.49 pm: RBI will continue to manage liquidity rate, will also consider open market consideration. OMOs going
ahead as liquidity condition improves, says Viral V Acharya.
2.48 pm: The surplus liquidity is moving to neutral from 7.69 trillion in the beginning of the year, says Viral V Acharya.
2.47 pm: Working closely with Govt, recapitalization will be front-loaded for banks that have exercised prudence, governance reforms will also feature as part of the overall plan to ensure money is used to strengthen PSBs: Urjit Patel
2.46 pm: Bank recapitalisation to be reform and recapitalisation plan, says RBI governor Urjit Patel
2.45 pm: Bank recapitalisation bonds would be front-loaded, says RBI governor Urjit Patel
2.44 pm: Recent reforms have boost ease of doing business, says RBI governor Urjit Patel
2.43 pm: RBI has decided to persevere with the neutral stance, decision; in addition, the committee expressed concern about fiscal slippage and global financial volatility: Urjit Patel
2.40 pm: Chetan Ghate, Pami Dua, Michael Debabrata Patra, Viral V Acharya and Urjit R Patel were in favour of the monetary policy decision, while Ravindra H. Dholakia voted for a policy rate reduction of 25 basis points
2.39 pm: MPC committed to keep CPI close to 4% on a durable basis.
2.34 pm: RBI maintains status quo; repot rate unchanged at 6%, reverse repo rate at 5.75%, bank rate at 6.25%.
2.33 pm: The GVA (gross value added) forecast for FY18 also kept unchanged at 6.7%.
2.30 pm: RBI keeps repo rate unchanged at 6%.
2.27 pm: RBI likely to sound more hawkish, prepared to move from neutral stance to tightening stance and some of the risks are building up, apart from inflation risks: Abheek Barua, HDFC Bank.
2.24 pm: The key equity indices Sensex and Nifty were trading in red since today morning as caution continues to weigh on stocks.
2.17 pm: Banks say the GVA (gross value added) forecast for FY18 to remain unchanged, CNBC-TV18 poll showed.
2.12 pm: India’s GVA (gross value added) growth rebounded to 6.1% in the second quarter compared to 5.6% in the first quarter.
2.10 pm: We expect a hawkish hold from the RBI…and policy rates to remain unchanged through 2018, Nomura said.
2.06 pm: The Reserve Bank is likely to reiterate its stance of bringing systemic liquidity closer to neutrality
2.02 pm: ICRA expects an extended pause amid non-unanimous voting by the MPC in the December policy review
1.59 pm: The monetary authority in October raised its inflation forecast to a range of 4.2 percent to 4.6 percent for October-March.
1.44 pm: EMIs unlikely to change as RBI may not cut interest rates.
1.36 pm: PMEAC member Surjit Bhalla said RBI’s Monetary Policy Committee (MPC) needs to work out its inflation model.
1.28 pm: RBI’s mid-quarter policy meet likely to add volatility in the market, HDFC Securities said.
1.26 pm: Uncertainty regarding the buoyancy of indirect tax collections post-GST, and the continued fiscal consolidation forecast by the rolling targets, may limit the fiscal space available to the government.
1.24 pm: Based on the expected gradual rise in currency with the public and continued working capital-led uptick in credit off-take, liquidity situation is likely to be close to neutral by mid-December, ICRA said.
1.20 pm: We expect the RBI to keep rates on hold this time and in February as well as the inflation is likely to remain high. The crude oil price is also hovering around $63 per barrel; the US oil price is also high,” Madhavi Arora, an economist at Kotak Institutional Equities told FE Online.
1.11 pm: Ahead of the monetary policy decision, 10-year bond yield touches 7.10%, last seen in September last year.
1.05 pm: The liquidity in the system is very low, deposit rates are firming up and there are concerns about inflation, Union Bank MD and CEO Rajkiran Rai G said.
1.03 pm: The banking sector stocks entered negative territory ahead of RBI monetary policy decision. SBI, HDFC Bank, ICICI Bank have lost up to 1.32% today.
1.01 pm: The RBI has fixed the reference rate of the rupee at 64.3764 against the US dollar and 76.3762 for the euro.
12.54 pm: The main source of RBI discomfort is that core inflation, which excludes food and energy prices, has remained stubbornly high at around 4.5%, say economists.
12.52 pm: The RBI has mopped up Rs. 90,000 crore through open market (OMO) bond sales between July and November.
12.37 pm: Pressure points for inflation are on the higher side but I don’t expect them to sound very hawkish given the fact that we expect goods and services tax (GST) rate cuts, Deepali Bhargava, Economist at Credit Suisse told CNBC TV18.
12.04 pm: Sensex and Nifty opened lower on Wednesday ahead of the monetary policy statement. BSE Sensex lost 101.24 points to mark the day’s low of 32,701.2 while NSE Nifty dropped 41.95 points to hit the day’s low at 10,076.3. The Indian rupee slipped 6 paise to 64.44 against the dollar at the interbank forex market.
12.03 pm: “Sometimes RBI must use rates to drive liquidity; sometimes it must use liquidity to drive rates; clearly now, the latter is called for,” Pronab Sen, former chief statistician told CNBC-TV18
11.51 am: By keeping rates high they have imposed a high output sacrifice, Ashima Goyal, a member of Prime Minister’s Economic Advisory Council told Bloomberg.
11.50 am: Our focus will be on the tone of the policy guidance, divided between a neutral or a hawkish bias.
11.45 am: Reuters poll said that “policymakers have little room for manoeuvre and the outlook for rates beyond the next few months is exceptionally fuzzy”.