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RBI Monetary Policy Highlights: Shaktikanta Das hikes repo rate by 50 bps; Inflation retained at 6.7%

RBI Monetary Policy Committee Meet Highlights: RBI Governor Shaktikanta Das announced to hike the repo rate by 50 bps on Friday

RBI Monetary Policy Highlights: Shaktikanta Das hikes repo rate by 50 bps; Inflation retained at 6.7%
RBI Monetary Policy Outcome Meeting LIVE UPDATES: RBI MPC hikes repo rate by 50 basis points to 5.9% (Pic Bloomberg)

RBI Monetary Policy Committee Meeting Highlights: The RBI Monetary Policy Committee decided to hike the repo rate by 50 basis points to 5.9 per cent, as expected by most of experts. In the last 5 months, repo rate saw an increase of 190 bps (it stood at 4% in April, and it’s at 5.90% now). Reserve Bank of India’s Governor Shaktikanta Das said that the SDF rate stands adjusted to 5.65%. He added that RBI will remain focused on the withdrawal of accommodation. “Geopolitical situation was affecting demand-supply scenario. Global central banks were aggressively hiking rates at the cost of economic distress. Against this backdrop, the Indian economy remains stable,” Das said. He added that India has sustained the shocks of pandemic, Russia-Ukraine conflict.

The RBI guv said that the MPC had retained the projections for Consumer Price Index (CPI)-based inflation that were given earlier. CPI inflation for the current financial year is seen at 6.7 per cent, with the price gauge seen at 7.1 per cent in July-September, 6.5 per cent in October-December and 5.8 per cent in January-March. CPI inflation is seen at 5 per cent in the first quarter of the next financial year. Talking about India’s GDP growth Das announced that MPC has cut the real GDP forecast for the current fiscal to 7 per cent from 7.2 per cent earlier. GDP growth in July-September is seen at 6.3 per cent, and that for October-December is seen at 4.6 per cent. The growth in January-March is seen at 4.6 per cent and that for the first quarter of the next financial year is seen at 7.2 per cent.

Live Updates
15:09 (IST) 30 Sep 2022
RBI to do one more rate hike of 25-35 bps in December

“ RBI's rate hike of 50 bps to take the repo rate to 5.90% was in line with market expectations. Given the aggressive rate hiking cycle by the US Fed, the low spread between Indian and US bond yields, and the strengthening USD, we expect RBI to do one more rate hike of 25-35 bps in December to take the repo rate close to 6.25%. Thereafter, we expect a pause, and the future trajectory will depend on incremental macro data.”

~Arun Kumar, Head of Research, FundsIndia

15:08 (IST) 30 Sep 2022
The policy is positive for Banks

“RBI raised Repo Rate by 50 bps to 5.9% from 5.4% with the central bank continuing to remain focused on the “withdrawal of accommodation” stance while supporting growth. Though inflation continues to be at elevated levels, the recent correction in the commodities and crude oil prices, if sustained, can ease the inflationary pressures. There was a growing concern about the fall in forex reserves and the RBI Governor came up with a statement that calmed these concerns by saying that 66% of the fall in forex reserves is due to the valuation changes arising due to appreciating dollar and higher bond yields. The economic Activities in India have remained resilient as highlighted by key data points like Bank credit growth accelerating to 14% against 7.9% a year ago, FPIs returning with $7.5Bn after an outflow for 9 consecutive months, External debt to GDP being the lowest amongst growing economies and Import growth decelerating compared to export growth. Real GDP growth for Q1FY23 at 13.5% which is above the pre-pandemic level and the expected decline in inflation in the coming quarters, demand is likely to gather pace. The policy is positive for the Banks and the nifty bank index can retest the 10 day EMA situated at 39000 levels.”

~Sandeep Bhardwaj, CEO, IIFL Securities 

15:07 (IST) 30 Sep 2022
Rate increase may make FD rate attractive for depositors

The rate hike of 50 bps was expected given the inflationary headwinds faced by the RBI and depreciating INR against the US dollar. One expects the increase interest at environment to continue till the inflation get stabilised at 4% with a tolerance band of 2 to 6%. Aug 2022 inflation of 7% and hike by US Fed has resulted in another increase in the REPO rate. One would expect rise in borrowing cost for HFCs and NBFCs and resultant pass on to the end customer who are at floating rate. It makes sense for borrowers to carefully plan their borrowings taking into account increased rates in the loans. This rate increase may make FD rate attractive for depositors while the pass on by the banks on their liability side may be flat. One expects RBI to maintain this stance of increased rate regime till macros on inflation numbers are stabilised.

Kalpesh Dave, Head Corporate Planning & Strategy, Star HFL

15:06 (IST) 30 Sep 2022
Expect a narrowing balance of payments deficit in coming months

“India is the only large economy which is able to reduce the pace of hikes providing evidence that India's monetary policy is working whereas western countries are dealing with unprecedented inflation and strikes on pay and pensions. India is the only economy within top 5 of the world which will grow at 7% as projected by RBI. Circulation which affects velocity of money is another key instrument which RBI uses to hone in inflation with CRR and Reserve Ratios which are tools it has not yet touched. India is somewhat of a safe haven now and inflow of USD by FPIs will arrest the fall of rupee which will further strengthen the hands of RBI to control inflation via oil and discretionary imports. We do expect a narrowing balance of payments deficit in coming months. However for many countries things are not so good. We are seeing a currency crisis unfold in west where Japan intervened in forex market after 28 years, followed by Gilts breaching 4% on announcement of minibudget by UK's new PM and finally Bank of England stepping in to control gilts market and forex.”

Abhishek Banerjee, smallcase manager & Founder, Lotus Dew

13:57 (IST) 30 Sep 2022
Repo rate to settle around 6.5% in the near term

“The policy stance is in line with the expectations of being accommodative along with focus on growth. There is a negative impact on GDP growth expectations of 4.6% in Q3 and Q4 considering impact of slowdown in large global economies. However, India would still continue to be better placed in terms of GDP growth and other macro factors. We expect another rate hike and the repo to settle around 6.5% in the near term. India is in a positive trajectory for now, all eyes would be on geo political tensions, opening up of China, commodity prices particularly energy and how slowdown pans out in large developed economies including US, UK, and European nations.”

Divam Sharma, smallcase manager & Founder, Green Portfolio

13:39 (IST) 30 Sep 2022
Market volatility to remain high with fast evolving global backdrop

“Amidst challenging global monetary policy backdrop, RBI stays with a 3rd consecutive rate hike of 50 bps and keeps a tight vigil on domestic inflation. Continuation with “withdrawal of accommodation” signals more rate hikes to come. External factors holding well as of now but needs to be monitored closely. Re-assurance on ample systemic liquidity provides relief to the shorter segment. Overall, in line with market expectations as of now but we expect market volatility to remain high with fast evolving global backdrop.”

~Vikas Garg– Head of Fixed Income, Invesco Mutual Fund

13:37 (IST) 30 Sep 2022
Few more hikes by RBI likely before a long pause on rates

“The 50 bps hike by the RBI was very much on expected lines. Central banks across EMs and DMs are hiking rates to control the sticky inflation. The easy monetary policy has led to inflation rising to levels never seen in the past few decades. It is pertinent to keep the policy stance at the withdrawal of accommodation as we need further tightening of policy to control inflation. Despite the cumulative 190 bps hike since May this year, it is encouraging to see the central bank estimating the growth rate at 7% for FY23. Going forward we expect a few more rate hikes by the RBI before a long pause on rates. India will be among the high-growth economies with the least depreciated policy against the USD. However, a spike in crude prices and geo-political tensions may play spoilsport.”

Nish Bhatt, Founder & CEO, Millwood Kane International

13:35 (IST) 30 Sep 2022
FX interventions are likely to continue

On liquidity, the RBI continued to re-iterate that it would conduct fine tuning operations to manage liquidity conditions. The central bank could gradually move towards maintaining liquidity conditions that are consistent with the operating rate becoming the repo rate, implying further upside for short-term rates in the economy. On the rupee, the RBI emphasized that their strategy would be focussed on maintaining investor confidence and anchoring expectations and that their FX reserves remained comfortable, signalling that FX interventions are likely to continue and be focused towards defending any extreme volatility in the rupee.

~ Sakshi Gupta, Principal Economist, HDFC Bank

13:34 (IST) 30 Sep 2022
MPC lowers GDP growth forecast by 20bps to 7%

The RBI raised the policy rate by 50bps to 5.9% as expected, aligning itself to aggressive monetary tightening globally. Moreover, the rate move was in response to continued domestic inflationary risks and growth that broadly continues to hold up. The central bank kept its inflation forecast unchanged at 6.7% in FY23 while lowering its GDP growth forecast by 20bps to 7% — the latter in response to the lower-than-expected Q1 GDP numbers. The RBI kept its stance unchanged at “withdrawal of accommodation” justifying it by the fact that liquidity remains in surplus, and the policy rate trails behind the inflation rate. The central bank drew a comparison with 2019 when the stance was last neutral, and liquidity was in a deficit mode while the policy rate was higher than inflation – indirectly alluding to real positive rates in the economy.

~Sakshi Gupta, Principal Economist, HDFC Bank

13:19 (IST) 30 Sep 2022
Rise in home loan rates will further impact affordability

Tight liquidity conditions along with the repo rate hike would lead to a significant rise in the cost of funding, impacting home loan rates as well. Going by the current trends we expect about 50% of this will be passed onto the home loan borrowers. A rise in home loan rates will further impact affordability across the markets. As per Knight Frank affordability index will deteriorate by another 2%  This might slowdown home buying decision for a short to medium term. However, we hope, India’s steady economic growth and revival in consumer’s sentiment towards the economy will bring back confidence amongst the end users and support their home buying activities.

~ Shishir Baijal, Chairman & Managing Director, Knight Frank India

13:18 (IST) 30 Sep 2022
MPC to impact sentiments across all buying categories in the wake of festive season

“The RBI stays committed to control inflation and bring it closer to the comfort level of 4% by continuing to increase the repo rate and tightening the liquidity condition. Although, global crude and commodity prices have softened a bit, revival in domestic demand along with sharp rupee depreciation would continue to exert price pressures leaving no choice for the RBI but to raise Repo Rate by another 50 bps taking the total rate hike since May 2022 to 190 bps. While this is expected in line with the global trend, it will have its impact on the sentiments across all buying categories, especially in the wake of the current festive season.”

~Shishir Baijal, Chairman & Managing Director, Knight Frank India

13:16 (IST) 30 Sep 2022
Interest rates largely expected to remain range bound for now

“Maintaining vigil on global macro developments while recognising domestic strengths and vulnerabilities, RBI increased policy rates by 50 bps, largely in line with market expectations. Pausing short of igniting any terminal rate expectations, RBI committed to data dependence for policy moves. I believe it is a very balanced policy and calmed market nerves, which had become edgy post recent fed actions and financial market volatility. As far as rate trajectory goes, I believe RBI would not want to let the interest rate guard down as it makes our currency vulnerable. Hence, as of now, we see repo rate going to 6.40%-6.65% range in next couple of policy meetings. Interest rates are largely expected to remain range bound for now.”

~Akhil Mittal, Senior Fund Manager-Fixed Income, Tata Mutual Fund

13:13 (IST) 30 Sep 2022
Monetary policy not as hawkish as market expected

“RBI has lowered its GDP growth forecast to 7 % 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. MPC maintains it stance of withdrawal of liquidity from the system. 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”.

~Murthy Nagarajan, Head-Fixed Income, Tata Mutual Fund

13:12 (IST) 30 Sep 2022
Bond yields and equity markets may not get much impacted by MPC announcements

“The MPC unanimously voted to raise the repo rate by 50 bps to 5.4% while remaining focused on withdrawal of accommodation.  The RBI has chosen to again front-load the rate hikes to tackle the elevated inflation levels which would remain above upper tolerance level of 6% till atleast Q3FY23. Move of a hike of 50bps highlights the urgency to move closer to the neutral policy rate especially when the external environment remains uncertain. Recent depreciation in rupee coupled with elevated crude oil prices (though now on falling trend); might have weighed on members’ decision in favour of larger rate hike, addressing external sector imbalance and reducing the interest rate differential. Even though inflation seems to have reached its peak, it still warrants caution given the uncertain global environment. Inflation projection of 5% for Q1FY24 by RBI provides some comfort indicating modest pace of rate hikes going forward. Bond yields and equity markets may not get much impacted by the announcement and will get driven by changes in global risk appetite and direction of global flows.”

~Dhiraj Relli, MD & CEO, HDFC Securities

13:11 (IST) 30 Sep 2022
As policy rates reach a normalized rate, RBI will have a lesser aggressive job to do next year

“Prolonged inflation is a worry, it feeds into expectations, which means people expect the inflation trend to continue and expect prices to remain high in the future as well and change their behaviour accordingly. Should the consumer decide to postpone spending, it will reverse the nascent consumer spending recovery that India has been witnessing lately. Besides, producers raise the prices of goods assuming that the higher production costs will persist. The RBI’s move is thus prudent to contain inflation expectations and prevent adaptive expectations from impacting demand and preventing the spiraling of prices. Moreover, as policy rates reaches a normalized rate, the RBI will have a lesser aggressive job to do next year.”

~Rumki Majumdar, Economist, Deloitte India

13:09 (IST) 30 Sep 2022
Inflation to peak earlier than previous estimates due to proactive actions by RBI

“The Runaway inflation prompted actions from the RBI. RBI’s move is justified in tightening the policy rates as it helps in anchoring inflation expectations when inflation has remained persistently high for a very long time (over two years now). In our upcoming forecast outlook, we expect inflation to remain high even though supply-side constraints will likely ease. This is because we are optimistic about demand and expect strong consumer spending to exceed supply, therefore leading to demand-pull inflation. That said, we expect our inflation to peak earlier than our previous estimates due to proactive actions by the RBI.”

~Rumki Majumdar, Economist, Deloitte India

13:05 (IST) 30 Sep 2022
India is better placed to handle future economic challenges

“In order to tame sticky inflation and cope up with the current global volatile economic scenario, the increase in the Repo rate by 50 basis points by the RBI is on expected lines. However, the stance has been maintained, indicating the intent of RBI to support growth in the mid-term tenure. The global unsettled environment and aggressive monetary policy tightening by the developed economies will impact our growth prospects which has forced RBI to a downward revision in the projected GDP growth rate to 7%, despite improvement in domestic aggregate demand and supply.”

“With stabilizing commodity prices, reasonable kharif /rabi prospects and the current action taken by RBI, prices are expected to be under control in the coming quarters. On the international front,RBI's assurance to continue its judicious intervention to ensure stability in the foreign exchange market is a welcome sign to curb uncertainties and support long term revival and resilience of the economy. The overall indicators and today's policy action indicates that India is better placed to handle future economic challenges, while the world is on verge of a possible recession.”

Jyoti Prakash Gadia, Managing Director, Resurgent India

12:58 (IST) 30 Sep 2022
RBI may be nearing the end of the rate hike cycle in India

“RBI hiked the policy rate by 50 bps along expected lines and also maintained its stance as “withdrawal of accommodation” citing that the real policy rate (adjusted for inflation) is still trailing pre-pandemic levels. GDP growth estimate for FY23 has been revised down marginally from 7.2% to 7%, while inflation forecasts have broadly been maintained. This indicates that the central bank is somewhat comfortable with macro-economic situation in India relative to other peer emerging economies. Therefore, we feel that the RBI may be nearing the end of the rate hike cycle in India and future rate hikes will have more to do with supporting the Indian currency and also to some extent the inflation trajectory. Both equity and bond markets have taken this in a positive stride and have rallied post the policy announcement.”

Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life Insurance

12:47 (IST) 30 Sep 2022
Bond yields could see some respite buying in the near term

“50 bps repo rate hike delivered was in line with expectation. Growth forecast was lowered marginally and CPI forecasts unchanged, which is what we had estimated. Key concerns seem to emanating from global factors and to a lesser extent domestic events. The RBI also is mindful of the currency movements given USD strength. We view the policy as neutral and ready to act in response to incoming data, both global and domestic. Bond yields could see some respite buying in the near term, but would continue to closely monitor global yields, especially UST for way forward. Also weighing in on bond markets would be the likelyhood of India bonds’ inclusion in Index, which May not culminate anytime soon”

~Lakshmi Iyer, Chief Investment Officer (Debt) & Head Products, Kotak Mahindra Asset Management Company

12:45 (IST) 30 Sep 2022
Macro-economic stability remains the key focus area

“Given that the global environment remains challenging with financial conditions tightening and fears of recession mounting, RBI stated that all segments of the financial markets are in turmoil globally and emerging market economies are also confronted with challenges of slowing growth, higher food and energy prices, spillovers from advanced economy policies, debt distress and sharp currency depreciation. Against this, the RBI has lowered the FY23 real GDP growth target to 7% versus 7.2% earlier even as domestic economic activity remains stable with resilient agriculture sector and strong credit demand. Moreover, despite the recent correction in commodity prices, CPI inflation target for FY23 has been kept unchanged at 6.7% on upside risks to food prices. The inflation forecast assumes Brent crude at $100/bbl in the 2HFY23. On the liquidity front, excess liquidity has moderated with LAF moving to deficit. The RBI has also decided to conduct only 14 day VRRR auctions from now on (merge 28 day VRRR with 14 day auctions). The RBI stated that intervention in FX market have been undertaken judiciously to curb volatility. Overall, the policy was largely in line and macro-economic stability remains the key focus area.”

Poonam Tandon, CIO, IndiaFirst Life Insurance Company.

12:43 (IST) 30 Sep 2022
Repo rates reverted to pre-pandemic levels

“With core inflation continuing to hover well above the upper tolerance limit, the RBI increased the repo rate by 50 bps, broadly in line with market expectations. Repo rates reverted to pre-pandemic levels, the highest since August 2019. The MPC maintained its stance on calibrated withdrawal of accommodation while supporting growth. We have seen system liquidity tighten since RBI started withdrawing excess liquidity, and system credit growth improved to 14%. With credit growth looking up, we believe the banks with a higher share of floating rates and a robust CASA-led deposit franchise should be placed well in this increasing interest rate environment. While the domestic inflationary pressures seem to be easing out gradually, the geopolitical tensions, volatility in global financial markets, and emerging risk of the global recession continue to remain key risks. Thus, the RBI has retained its inflation estimates for FY23, mildly tweaking Q2 and Q3 estimates, expecting relief only from Q4 onwards. It has also retained its growth estimates at 7.2% for FY23.”

Naveen Kulkarni , Chief Investment Officer, Axis Securities

12:41 (IST) 30 Sep 2022
Inflation to close to 4% over next two years

RBI Guv says expecting inflation to come down close to the target of 4% over a two year period

12:40 (IST) 30 Sep 2022
RBI Guv on letter to Central Government on inflation

“If you see the legal provisions under the RBI Act, the MPC has to have a meeting to discuss the RBI's letter to the government. We are expecting inflation to come down close to the target over a two-year cycle. That was our expectation earlier and even now. But there are so many uncertainties coming in from time to time” said Das

12:37 (IST) 30 Sep 2022
Stress high amid global policy tightening

“Stress on global financial system high on policy tightening, says Governor Shaktikanta Das

12:13 (IST) 30 Sep 2022
Domestic inflation and growth to guide MPC decisions

RBI Governor Shaktikanta Das said that domestic inflation and growth to guide MPC decisions

12:11 (IST) 30 Sep 2022
Aggressive monetary policy action is 3rd shock to the world: RBI press conference

Aggressive monetary policy action is the 3rd shock to the world after COVID, and Russia-Ukraine war

12:09 (IST) 30 Sep 2022
RBI press conference

MPC decisions to continue to be guided by domestic inflation and growth. Currency market volatility not a guiding factor

11:31 (IST) 30 Sep 2022
25 bps rate hike likely in December MPC meeting

The RBI’s MPC raised its policy repo rate by 50bp to 5.9% as we were expecting. We expect a further increase of 25bp at the December MPC meeting, by which time CPI inflation will likely moderate to 6% YoY as the strong kharip crop is harvested. Once real interest rates are positive, the MPC can pause its rate hikes. The RBI too believes that CPI inflation will average 6%YoY in H2FY23. All central banks (with the exception of China’s) are prioritising the fight against inflation. The US, Eurozone and UK currently have much higher inflation rates than their targeted levels of inflation. India is only marginally higher than its targeted inflation rate, but has stayed persistently above it for half a year, hence the need to persist with rate hikes. The current account deficit widened to 2.8% of GDP in Q1FY23, but India’s external debt declined US$617bn (19.4% of GDP) in June 2022. We expect the BoP current account deficit to widen to 3.3% of GDP in Q2FY23, but to then moderate to 1.6% of GDP in H2FY23 as crude oil prices recede.

Prasenjit Basu – Chief Economist, ICICI Securities

11:29 (IST) 30 Sep 2022
Possibility of an additional hike in Q3FY23

“On the growth front, RBI appears to be fairly confident on the resilience of the domestic economy despite the global headwinds. While the GDP forecast for FY23 has been slightly moderated to 7.0%, there is a comfort emerging from the recovery in private consumption and the improved performance of the monsoon. This will help the central bank to continue on its hawkish stance till inflation declines below 6.0%. As regards headline inflation, MPC has maintained the existing forecast of 6.7% given the upside risks on food inflation and the likely rigidity of core inflation given the increasing consumption demand. The possibility of an additional hike in Q3FY23 is also borne out of RBI’s expectation that inflation will not come down in a hurry, given that they have projected an average CPI print of 6.5% in the next quarter, well above the upper MPC band.”

– Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research

11:28 (IST) 30 Sep 2022
Likelihood of a terminal rate of 6.5% and even above has increased

“On expected lines, RBI MPC has raised the repo rate for the fourth time in the current fiscal, taking the aggregate hike to 190 bps. Importantly, the central bank has continued to be in the “withdrawal of accommodation” mode, reflecting the increased possibility of a further rate hike in the Dec’22 of MPC. Clearly, the key concern at the current juncture is the persistent and the sharp monetary tightening by the major central banks which the governor referred to as the “next storm” after the pandemic and the war in Ukraine. Therefore, the likelihood of a terminal or neutral rate of 6.5% and even above over the next 2 quarters has clearly increased.”

~Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research

11:26 (IST) 30 Sep 2022
Rate hike in-line with expectations

“The 50 bps rate hike by the RBI in today’s meeting was in-line with the expectations. The key highlights were the resilience shown by the Indian economy considering the turbulent global environment and concerns emanating from global growth slowdown & hawkish stances of various central banks. Inflation is witnessing a downward trajectory, nonetheless, the reduction in GDP growth forecasts was one of the letdowns in the overall commentary.”

~Santosh Meena, Head of Research, Swastika Investmart

11:25 (IST) 30 Sep 2022
Possibility of a further rate hike, albeit a less severe one, in the upcoming meeting

“The recent 50 bps rate hike was crucial considering the global environment and inflation concerns. It is important to note that despite the global headwinds, the governor’s view on the Indian economy is constructive. However, to ensure that the current recovery sustains, the government needs to increase spending. Key concerns mentioned in the commentary were global & geopolitical uncertainties, rising crude oil prices, and prolonged rains leading to food inflation. In short, we believe that the is a possibility of a further rate hike albeit a less severe one in the upcoming meeting.”

~Parth Nyati, Founder, Tradingo

11:23 (IST) 30 Sep 2022
RBI batting on a difficult pitch against hostile bowling

“The RBI gave a “Mai Hoon Na” policy doing a fine tight rope walking between Inflation, Growth and Stability. The RBI is batting on a difficult pitch against a hostile bowling. Rapidly deteriorating global situation, drawdown of systematic liquidity and FX reserves, inflationary pressure and Growth concern are testing the RBI. The RBI has so far batted with few misses. Most important thing is that they haven’t lost the wicket and kept score board moving. The RBI has been proactive and data-driven to deal with rapidly evolving situation. They have assured the market that they are in safe hands in the global storm.”

~Nilesh Shah, Group President & MD,  Kotak Mahindra Asset Management Company

11:22 (IST) 30 Sep 2022
Global disruption will remain key to RBI’s reaction function ahead

“This conscious front-loading could give them some breather next year on shallow hikes ahead. With inflation likely to be largely in line with RBI’s estimates, this week’s 50bps hike will make the ex-post forward real repo rate* positive, albeit still lower than the RBI’s estimated real neutral rate of 0.8-1%. At this point, we still think that the RBI would not go too restrictive and terminal rate could hover near the estimated real rates, implying not more than 100bps hikes ahead, including today’s decision. However, the extent of global disruption will remain key to the RBI’s reaction function ahead.”

Madhavi Arora, Lead Economist, Emkay Global Financial Services

11:21 (IST) 30 Sep 2022
RBI MPC: Browbeaten by the West

The MPC delieved 50bps hike in line with expectations. Clearly, the fast-evolving world order and consistent repricing of Fed’s outsized hikes are strong-arming the EMs. This painful adjustment has not spared the RBI either,which realised the net cost of a supposed soft signalling via shallow hike could be higher than a larger hike of 50bps. This exposes the instability inherent with the classic EM central bank trilemma: one cannot have a stable currency, unfettered capital flows, and independent monetary policy all at the same time.

Madhavi Arora, Lead Economist, Emkay Global Financial Services

11:20 (IST) 30 Sep 2022
RBI to remain prudent in terms of balancing between growth and inflation

“Indian central bank has raised repo rates by 50 bps along expected lines. As the governor has noted, global economy is in turmoil and India needs to be watchful both on the external account as well as in terms of the domestic fiscal situation. We expect the RBI to remain prudent in terms of balancing between growth and inflation.” said Sameer Kaul – MD & CEO, TrustPlutus Wealth

11:19 (IST) 30 Sep 2022
Markets react positively to policy announcement

“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.

10:49 (IST) 30 Sep 2022
Rise in rates to slow down capex plans of corporate India

The 50 basis points (bps) hike in policy rates has been in line with market expectation. The current stand by the Reserve Bank of India (RBI) is partly driven by the US Federal Reserve which is going aggresive in order to bring down inflation. RBI had to do this instead of a 30-35 bps to control Rupee depreciation and therefore imported inflation. Meanwhile the rise in rates will slowdown Capex plans of Corporate India which were just about kicking off. Anu Aggarwal, President & Head of Corporate Banking, Kotak Mahindra Bank

10:49 (IST) 30 Sep 2022
Home loans get dearer on repo rate hike

With this repo rate hike, home loans will get dearer soon. This could impact residential sales to some extent during the upcoming festive quarter, particularly in the affordable and mid-range housing segments. The hike in home loan rates will be in addition to the other increasing costs such as inflationary trends of construction input costs. With the overall acquisition cost increasing further, developers will have to seriously consider doling out targeted offers and discounts to boost sales during the critical festive quarter. The silver lining is that only when the home loan interest rates breach the 9.5% mark will housing sales see a ‘High Impact’. If rates remain between 8.5-9%, the impact is expected to be moderate. Anuj Puri, Chairman – ANAROCK Group

10:39 (IST) 30 Sep 2022
Nifty may sustain the support of 16800 levels

In line with the expectation, RBI has increased the repo rate by 50 basis points and is already discounted by the market. The indices and stocks are currently witnessing weakness taking cues from the selling pressure in the global markets. Nifty may sustain the support of 16800 levels if the international markets show reversal. A rebound in Nifty may show the levels of 17200 else the downside levels of 16500 is possible. Being inflation and rupee weakness still major concerns which needs to be improved keeping economic growth in pace, Investors should wait till the market sentiments stabilises for fresh entry. Ravi Singh, VP & Head of Research, Share India Securities

10:36 (IST) 30 Sep 2022
RBI Monetary Policy Committee hikes repo rate by 50 bps to 5.9%, cuts FY23 GDP growth forecast to 7%

The RBI Monetary Policy Committee (MPC) on Friday decided to hike the repo rate by 50 basis points to 5.9 per cent, in-line with expectations. RBI Governor Shaktikanta Das said in his post policy meet address that 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. He added that RBI will remain focused on ‘withdrawal of accommodation’. He added that inflation continues to be high. “After two shocks of coronavirus pandemic and the conflict in Ukraine, now we are in the midst of another shock, a storm, arising from aggressive monetary policies by the global central banks,” he said. Read full story

10:34 (IST) 30 Sep 2022
RBI intervenes in forex market to curb excessive volatility

RBI intervenes in the forex market to curb excessive volatility. RBI Forex reserves umbrella remains strong. INR has fared better than many other currencies

10:32 (IST) 30 Sep 2022
Shaktikanta Das on brent crude

The Indian basket of crude oil prices stood at $104/barrel in the first half of FY23. MPC is assuming Brent crude at $100 per barrel in the second half of FY23. Crude price correction if sustained can ease price pressure.

10:31 (IST) 30 Sep 2022
GDP growth forecast

Q2FY23 GDP growth seen at 6.3%,

Q3FY23 at 4.6%, and

Q4FY23 at 4.6%

10:29 (IST) 30 Sep 2022
Rupee is a freely floating currency: Shaktikanta Das

He added that Rupee is a freely floating currency. RBI doesn't have fixed exchange rate in mind. The central bank intervenes to adjust volatility in market. “Intervention in FX market based on evolving situation, and the forward guidance may destabilize capital markets,” Das said.

10:28 (IST) 30 Sep 2022
Shaktikanta Das on Indian Rupee

Das noted that Indian Rupee has fallen 7.4% vs US dollar from April 2022. The currency has depreciated in an orderly manner. Indian rupee has fared much better than several other currencies

10:26 (IST) 30 Sep 2022
Merge 14-day VRRR with main auctions

RBI Governor Shaktikanta Das announced to merge 14-day VRRR with the main auctions

10:24 (IST) 30 Sep 2022
RBI MPC must carry calibrated actions on monetary policy, liquidity withdrawal

RBI Governor Shaktikanta Das said that MPC have to carry calibrated actions on monetary policy and liquidity withdrawal. India still better placed as against other high inflation economies.

10:21 (IST) 30 Sep 2022
CPI Inflation projection for FY23 retained at 6.7%: RBI GUV Das

Shaktikanta Das said that the inflation projection for FY23 was retained at 6.7%. Edible price pressures were expected to remain contained. Selling prices may temper ahead with slide in costs of commodities, metals. He also added that upside risks remain to food prices, and delayed withdrawal of monsoon was impacting vegetable prices.

10:19 (IST) 30 Sep 2022
Real GDP for FY23 projected at 7%: RBI Guv

RBI Governor Shaktikanta Das said that the real GDP for FY23 was projected at 7%