RBI Monetary Policy HIGHLIGHTS: RBI cuts repo rate by 25 basis points, eases stance under Shaktikanta Das

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Updated:Feb 07, 2019 1:50:11 pm

RBI Monetary Policy HIGHLIGHTS: The Reserve Bank of India has cut the repo rate by 25 basis points in its sixth bi-monthly monetary policy statement for 2018-19.

RBi, interest rates, RBI interest rates, RBI rates, Stock market, India stocks, central bank, market newsRBI Monetary Policy HIGHLIGHTS: In its last bi-monthly monetary policy, the bank had kept the repo rate unchanged at 6.5 percent and the reverse repo rate at 6.25 percent.

RBI Monetary Policy HIGHLIGHTS: The Reserve Bank of India has cut the repo rate by 25 basis points in its sixth bi-monthly monetary policy statement for 2018-19. The three-day policy review meeting by the Monetary Policy Committee (MPC) began in Mumbai on Tuesday. The MPC is headed by RBI Governor Shaktikanta Das. In its last bi-monthly monetary policy, the bank had kept the repo rate unchanged at 6.5 percent and the reverse repo rate at 6.25 percent.

RBI has also changed the stance of the monetary policy to ‘neutral’ from ‘calibrated tightening’.

Most economists had predicted that the repurchase rate would probably be kept steady at 6.5 percent, according to 32 of the 43 economists surveyed by Bloomberg as of Wednesday, with the rest expecting a 25 basis-point reduction. Real interest rates in India are among the highest in Asia, and calls for the first cut in the policy rate since August 2017 have been growing.

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13:50 (IST)07 Feb 2019
Balanced, pragmatic policy statement, says Subhash Chandra Garg

"A very balanced and pragmatic policy statement. Assessment of growth and inflation is quite realistic and underlines low inflation and high growth path for India for 2019-20. Welcome change of stance to neutral and rate cut by 25 bps. Also welcome removal of FPI restriction," said Subhash Chandra Garg.

13:20 (IST)07 Feb 2019
Budget proposals to boost demand

"Several proposals in the union budget for 2019-20 are likely to boost aggregate demand by raising disposable incomes, but the full effect of some of the measures is likely to materialise over a period of time," MPC said.

13:11 (IST)07 Feb 2019
MPC on prices of health, education services

MPC also said recent unusual pick-up in the prices of health and education services could be a one-off phenomenon, adding that the crude oil price outlook remains broadly the same as in the December policy.

13:08 (IST)07 Feb 2019
Understanding repo, reverse repo rate

Repo rate, also known as the benchmark interest rate is the rate at which the RBI lends money to the banks for a short term. When the repo rate increases, borrowing from RBI becomes more expensive. This in turn, raises the interest rate in the economy and therefore reduces the total money supply.

Read more: EXPLAINED: What is repo rate, reverse repo rate and MSF; Learn how it affects interest rates of your loan

13:05 (IST)07 Feb 2019
RBI on regulatory policies

On the regulatory policies front, the RBI proposed relaxations on foreign borrowings by companies undergoing insolvency resolutions to pay off the local lenders, redefined bulk deposits as those above Rs 2 crore from the earlier Rs 1 crore, align risk weights of bank loans to NBFCs with their ratings rather than a blanket 100 per cent earlier and also harmonise categories of NBFCs.

12:59 (IST)07 Feb 2019
RBI Governor on NPAs

RBI says no proposal on its table seeking modifications to the February 12, 2018 circular on NPA recognition, says governor.

12:56 (IST)07 Feb 2019
Inflation pathmay moved down significantly, says RBI Governor

Pathway of inflation moved down significantly, said RBI Governor Shaktikanta Das.

12:53 (IST)07 Feb 2019
RBI on global economic activity

"Since the last MPC meeting in December 2018, there has been a slowdown in global economic activity. Among key advanced economies (AEs), economic activity in the US lost some steam in Q4:2018. The outlook for Q1:2019 is clouded by the partial government shutdown, though the labour market conditions remain strong," MPC said.

12:48 (IST)07 Feb 2019
RBI on trade war

"(F)urther heightening of trade tensions and geo-political uncertainties could also weigh on global growth prospects, dampening global demand and softening global commodity prices, especially oil prices," RBI said.

12:44 (IST)07 Feb 2019
Farm credit for capital formation

"There is also the issue of deepening long-term agricultural credit for capital formation," the RBI said while announcing setting up of the IWG. The IWG will examine issues related to agricultural credit and arrive at workable solutions and policy initiatives

12:41 (IST)07 Feb 2019
MPC decision on stance change unanimous

The decision to change the monetary policy stance was unanimous. As regards the reduction in the policy repo rate, Dr. Ravindra H. Dholakia, Dr. Pami Dua, Dr. Michael Debabrata Patra and Shri Shaktikanta Das voted in favour of the decision. Dr. Chetan Ghate and Dr. Viral V. Acharya voted to keep the policy rate unchanged. The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 per cent on a durable basis.

12:39 (IST)07 Feb 2019
Weakening demand conditions in manufacyuring sector

While the Reserve Bank’s business assessment index of the industrial outlook survey (IOS) for Q3:2018-19 suggests a weakening of demand conditions in the manufacturing sector, the business expectations index (BEI) points to an improvement in Q4.The manufacturing purchasing managers’ index (PMI) for January remained in expansion on the back of increased output and new orders.

12:31 (IST)07 Feb 2019
Inflation expectations of households

Inflation expectations of households, measured by the December 2018 round of the Reserve Bank’s survey, softened by 80 basis points for the three-month ahead horizon and by 130 basis points for the twelve-month ahead horizon over the last round, reflecting the continued decline in food and fuel prices. Producers’ assessment of inflation in input prices eased in Q3 as reported by manufacturing firms polled by the Reserve Bank’s industrial outlook survey.

12:27 (IST)07 Feb 2019
RBI governor on liquidity crisis

"Governor Das says ‘have tried to understand the issues facing NBFCs, some action has been taken, other suggestions under consideration. Will ensure there is no liquidity scarcity," he said during a press meet.

12:25 (IST)07 Feb 2019
RBI governor says will look to encourage participation in domestic market

4 measures announced for banks and NBFCs- revising threshold of bulk deposit for banks, harmonisation of 3 different kinds of NBFCs, alignment of risk weights. Governor Das ‘will dey up a task force on offshore rupee market to look at causes for growth of this market and suggest ways to encourage non residents to participate in domestic market’

12:22 (IST)07 Feb 2019
Economic activity slowed in major emerging nations; says MPC

"Economic activity also slowed in some major emerging market economies (EMEs). In  China, growth decelerated in Q4:2018. Economic activity in Russia lost pace, with soft oil prices posing a downside risk to growth. The Brazilian economy appeared to have ended 2018 on a firmer note, driven by improved domestic spending and exports, though industrial activity continued to struggle to recover from the disruptions of H1: 2018. In South Africa, the economic recovery in Q4:2018 remained gradual, tempered by weak industrial activity and subdued exports," MPC said.

12:20 (IST)07 Feb 2019
Slowing global demand could pose headwinmds

"Looking beyond the current year, the growth outlook is likely to be influenced by... aggregate bank credit; and overall financial flows to the commercial sector continue to be strong, but are yet to be broad-based," the MPC said. It further said that in spite of soft crude oil prices and the lagged impact of the recent depreciation of the Indian rupee on net exports, slowing global demand could pose headwinds.

12:17 (IST)07 Feb 2019
GDP growth projected at 7.4%

GDP growth for 2018-19 in the December policy was  projected at 7.4 per cent (7.2-7.3 per cent in H2) and at 7.5 per cent for H1:2019-20, with risks somewhat to the downside. The CSO has estimated GDP growth at 7.2 per cent for 2018-19. Looking beyond the current year, the growth outlook is likely to be influenced by the following factors.

12:13 (IST)07 Feb 2019
Farm output likley to decelerate, says Shaktikanta Das

Farm output expected to decelarate in FY19. Continuing deflation in food and fall in crude led to decline in headline inflation. Need to strengthen private investment activity," said RBI Governor Shaktikanta Das during media interaction.

12:11 (IST)07 Feb 2019
Viral Acharya voted for status quo

Deputy Governor Viral Acharya and another MPC member, Chetan Ghate, voted for status quo in interest rates, while Das and three others voted for a cut in interest rates.

12:10 (IST)07 Feb 2019
Headline inflation to remain soft

"Headline inflation is projected to remain soft in the near term, reflecting the current low level of inflation and the benign food inflation outlook,” the MPC resolution said, adding "we need to be watchful of vegetable prices, oil prices, trade tensions, health and education inflation, financial market volatility and monsoon outcomes", said RBI.

12:09 (IST)07 Feb 2019
Retail inflation revised downwards

The RBI cut its estimates on headline inflation – which cooled off to a 18-month low of 2.2 per cent in December – for the next year, and expects the number to come at 2.8 per cent in March quarter, 3.2-3.4 per cent in first half of next fiscal and 3.9 per cent in third quarter of FY20.

12:08 (IST)07 Feb 2019
Budget proposals will boost demand: RBI

Union budget proposals will boost demand by raising disposable incomes, may take time to play out, says RBI.

12:05 (IST)07 Feb 2019
RBI governor on collateral-free loan

RBI to up limit for collateral-free farm loan to Rs 1.6 lakh.

 
12:01 (IST)07 Feb 2019
RBI decision to change stance unanimous; says RBI governor

RBI says MPC unanimously votes to change Policy stance to 'Neutral'

11:59 (IST)07 Feb 2019
RBI on GDP outlook

"Turning to the growth outlook, GDP growth for 2018-19 in the December policy was projected at 7.4 per cent (7.2-7.3 per cent in H2) and at 7.5 per cent for H1:2019-20, with risks somewhat to the downside. The CSO has estimated GDP growth at 7.2 per cent for 2018-19. Looking beyond the current year, the growth outlook is likely to be influenced by the following factors. First, aggregate bank credit and overall financial flows to the commercial sector continue to be strong, but are yet to be broad-based," RBI said. 

11:54 (IST)07 Feb 2019
RBI rate cut: Central Bank says decision in consonance with achieving the medium-term target for CPI inflation of 4%

"On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to: reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5 per cent to 6.25 per cent with immediate effect. Consequently, the reverse repo rate under the LAF stands adjusted to 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.5 per cent. The MPC also decided to change the monetary policy stance from calibrated tightening to neutral. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth," RBI said in its statement. 

11:47 (IST)07 Feb 2019
It's a Cut! RBI Monetary Policy Repo Rate Cut

RBI cuts repo rate by 25 basis points to 6.25%; changes stance of Monetary Policy to 'neutral'

11:37 (IST)07 Feb 2019
RBI overestimated inflation, says PMEAC member Ashima Goel

Ahead of new Governor Shaktikanta Das’ first RBI Monetary Policy announcement today, Prime Minister’s Economic Advisory Council member Ashima Goel called for a 25 basis points cut in repo rate, saying that the central bank has overestimated inflation target. RBI policy has been too tight, Ashima Goel said late evening yesterday as a panelist at the Shadow Monetary Policy Committee meet, organised by EGrow Foundation. She played down inflation concerns, saying that RBI’s inflation targeting has been overestimated, and that interest rates are high.

11:33 (IST)07 Feb 2019
First MPC meet under Shaktikanta Das

The policy holds interest since it’s the last of the fiscal and also the first under Das, who took charge in December 2018 following the sudden exit of Urjit Patel.

11:30 (IST)07 Feb 2019
RBI changes release time of monetary policy statement; check new schedule

In a departure from the norm held for over two years, RBI Monetary Policy Committee (MPC) will release its sixth bi-monthly policy statement on February 7 at 11:45 am instead of 2:30 pm. However, the central bank didn’t give a reason for the same.

Read more: RBI changes release time of monetary policy statement; check new schedule

 
11:26 (IST)07 Feb 2019
RBI may change stance, says CARE Ratings

The Central Bank may change its stance to neutral from calibrated tightening, CARE Ratings.

Read more: RBI Monetary Policy: Under Shaktikanta Das, will central bank change rates? Here’s what CARE says

11:24 (IST)07 Feb 2019
Shaktikanta Das may shed central bank’s hawkish outlook

The Reserve Bank of India headed by a new chief, Shaktikanta Das, will probably drop its hawkish bias on Thursday, the first step toward a possible interest-rate cut this year as inflation drifts lower and the economy slows.

Read more: RBI may signal rate cuts; Shaktikanta Das may shed central bank’s hawkish outlook

RBI Monetary Policy: The repurchase rate will probably be kept steady at 6.5 percent, according to 32 of the 43 economists surveyed by Bloomberg as of Wednesday, with the rest expecting a 25 basis-point reduction. Real interest rates in India are among the highest in Asia, and calls for the first cut in the policy rate since August 2017 have been growing.
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