RBI MPC Highlights: Repo rate hiked by 50 bps, GDP growth seen at 7.2%, inflation projected at 6.7% this fiscal

RBI Highlights: Reserve Bank of India’s Monetary Policy Committee (MPC) decided to hike the Policy Repo Rate by 50 basis points to 4.9%

RBI MPC Decision live
Economists and analysts believe the MPC could hike interest rates by 25-50 basis points today. (Image: REUTERS)

RBI Monetary Policy Highlights: Reserve Bank of India’s Monetary Policy Committee (MPC) decided to hike the Policy Repo Rate by 50 basis points to 4.9% in its June meeting. RBI Governor Das said that MPC members voted unanimously to hike rates and decided to remain focused on a withdrawal of accommodation to ensure that inflation remains within the target going forward while supporting growth. MPC noted that inflation is likely to remain elevated for the first three quarters of the current financial year and sees inflation for the year at 6.7%. Real GDP growth rate for the year has been retained at 7.2%. RBI Governor Das said that the war in Europe is lingering and the world is facing new challenges which have accentuated supply chain disruptions. “Indian economy is resilient with strong macroeconomic buffers. Inflation is primarily attributed to supply shocks linked to war,” Shaktikanta Das said.

Live Updates
15:30 (IST) 8 Jun 2022
Experts see RBI to hike rates by 75-100 basis points by December

As the inflation beast continues to bite into economic growth, the Reserve Bank of India’s monetary policy committee unanimously decided to tame this ‘steeply’ rising inflation by raising interest rates 50 basis points. Experts see 75-100 basis points rate hike by the end of current year, with the quantum of hikes in the upcoming August MPC meeting.  Read more here

14:55 (IST) 8 Jun 2022
‘Central bank attempts to knock inflation out of park but is still far from finishing line’

“To knock high inflation out of the park, central banks are having to step out of the crease and come out swinging with tight monetary policy. Today’s hike by 50 basis points on the top of an inter-meeting 40-basis-point hike in May is reflective of inflation elbowing its way to the top of the RBI’s priority list and it belatedly looking to catch up with the curve. RBI's upward revision of the inflation forecast for FY 2023 to 6.7% from 5.7% in April was also in line with our expectations, but still lower than our forecast of 7.2%. So we believe that we are still far from the finishing line and that more front loaded rate hikes are on the offing.”

~ Aurodeep Nandi, India Economist, Nomura

14:52 (IST) 8 Jun 2022
RBI MPC meeting: Top 5 Key Takeaways

In a second round of policy rate hike in two months, the RBI's monetary policy committee (MPC) has unanimously voted to raise repo rates by 50 basis points, taking it to 4.9 per cent. From hiking repo rates to raising inflation projections, here are key takeaways from RBI's monetary policy announcement. Read here

13:23 (IST) 8 Jun 2022
Equity and bond markets react well

“The bond markets and equity markets reacted well to the MPC outcome being relieved that the MPC did not sound more hawkish than most expectations. The absence of a CRR hike also was a relief. Stock prices of rate-sensitive sectors including Auto, Banks, Finance, Durables, and Realty have reacted well to the MPC outcome due to the above. However, this up-move may need more triggers to continue. While a revisit of the pre-Covid repo rate of 5.15% over the next 1-2 meets is a given (vs 4.90% currently), most economists expect this to go above 5.15%. A lot in this regard will depend on how soon the inflation peaks out and begins to fall and when do the global Central Banks feel that they are done with the rate hikes for now.”

~ Dhiraj Relli, MD & CEO, HDFC Securities

12:55 (IST) 8 Jun 2022
Card tokenisation process is satisfactory

Progress towards tokenization is satisfactory, Deputy governor Rabi Sankar said. The central bank's deadline for card tokenisation is June 30.

12:51 (IST) 8 Jun 2022
RBI Digital currency will come this year

Central Bank's digital currency to be introduced this year, RBI said today. The introduction of the same will be gradual.

12:50 (IST) 8 Jun 2022
India is better performing economy among other EMEs: Das

India is better performing economy among the other EMEs, Das said. The economy is on a recovery path as seen in improvement in factors such as rural, urban demand, and capacity utilisation, he added.

12:45 (IST) 8 Jun 2022
Another 75 basis points rate hike this fiscal

“The stance continues to be focussed on withdrawal of accommodation. The triple whammy of commodity-price shocks, supply-chain shocks and resilient growth, has shifted the reaction function in favor of inflation containment. The reaction function is now evolving with fluid macro realities. The inflation prints of next two quarters are likely to exceed 7%, which could pressure the RBI into acting sooner rather than later,” said Madhavi Arora, Lead Economist, Emkay Global Financial Services. “FY23 could thus further see rates going up by 75 bps+, with the RBI now showing its intent to keep real rates neutral or above to quickly reach pre-Covid levels. Our Taylor’s estimate shows a max tightening of policy rate by 6% by FY23, of which liquidity tightening to 2% of NDTL is tantamount to another estimated 25bps of effective rate hike,” she added.

12:37 (IST) 8 Jun 2022
Barclays expects policy rate to reach 5.75% by December

“The RBI revised up its inflation forecasts, but kept its growth projections. This signals its intention to keep inflation at the centre of its decision making, and desire to return to the pre-COVID policy stance as soon as it can. We now expect the policy rate to reach 5.75% by December, from 5.15% earlier.”

– Rahul Bajoria, MD & Chief India Economist, Barclays

12:33 (IST) 8 Jun 2022
Inflation prints of next two quarters to exceed 7%

“The 50bps rate hike in policy repo rate is in line with our expectations of RBI remaining front-loaded on rate hikes, after un-anchoring markets’ policy expectation in Apr/May. The stance continues to be focussed on withdrawal of accommodation. The triple whammy of commodity-price shocks, supply-chain shocks and resilient growth, has shifted the reaction function in favor of inflation containment. The reaction function is now evolving with fluid macro realities. The inflation prints of next two quarters are likely to exceed 7%, which could pressure the RBI into acting sooner rather than later.”

– Madhavi Arora, Lead Economist, Emkay Global Financial Services

12:28 (IST) 8 Jun 2022
4% inflation target remains

RBI Governor Shaktikanta Das said that the RBI and MPC retain 4% inflation target (+/- 2%). Currently, inflation is well above the tolerance band.

12:18 (IST) 8 Jun 2022
Das said will deal with inflation breach as and when it arises

Asked about the breach in inflation target of 6%, according to RBI-government framework, Governor Shaktikanta Das said RBI will deal with the situation as and when situation arises. He noted that these are extremely uncertain conditions, and hence extremely uncertain outlook. It is not possible to provide forward guidance, Das said.

12:12 (IST) 8 Jun 2022
RBI remains accommodative but is focusing on withdrawal of accommodation

RBI remains accommodative but is focusing on withdrawal of accommodation – RBI Governor Shaktikanta Das.

'In terms of rates, RBI is still below the pre-pandemic level and in liquidity terms, we are above pre-pandemic level- this is what we mean when we say we remain accommodative,' Das said.

12:09 (IST) 8 Jun 2022
75% of inflation projections attributed to food inflation: Das

75 per cent increase in inflation projections attributed to food inflation. RBI has raised FY 2023 inflation projections to 6.7% : Governor Das.

12:07 (IST) 8 Jun 2022
RBI MPC media interaction begins

Media interaction on RBI’s Monetary Policy with Goveror Shaktikanta Das begins.

12:00 (IST) 8 Jun 2022
ICRA foresees further rate hikes

“While further rate hikes remain clearly on the table, with the reference to the revised repo rate of 4.9% remaining below the pre-pandemic level, the comment on the orderly completion of the government borrowing programme has served to cool the 10-year G-sec yield. We foresee further repo hikes of 35 bps and 25 bps, respectively, in the next two policies. However, the upmarch in the yields will now be somewhat shallower than our earlier expectations.”

~Aditi Nayar, Chief Economist, ICRA

11:38 (IST) 8 Jun 2022
Inflation risks have materialised

“Inflation risks flagged in the April and May resolutions of the MPC have materialised. The projections indicate that inflation is likely to remain above the upper tolerance level of 6 per cent through the first three quarters of 2022-23. Considerable uncertainty surrounds the inflation trajectory due to global growth risks and geopolitical tensions,” Governor Shaktikanta Das said.

11:23 (IST) 8 Jun 2022
Rate hike of similar quantum likely in next MPC meet

“Post the off-cycle announcement of a rate hike in May 2022, paving the way for a series of rate hikes in the following meetings, the RBI increased the repo rate by 50bps. The MPC has decided to focus on calibrated withdrawal of accommodation while supporting growth. May 2022 witnessed pro-active measures by the central government in the form of excise duty cut on petrol and diesel, a ban on wheat export, and other similar measures easing domestic inflationary pressures. However, keeping in view the ongoing geopolitical tensions, rising crude oil prices, and global inflationary input cost pressures, the regulator has increased its inflation estimate for FY23 to 6.7% vs 5.7% earlier. RBI has retained its growth estimates at 7.2%. We believe the market had already discounted a rate hike of 40-50bps, and the key monitorable was a commentary on inflation. We may witness another rate hike, probably of a similar quantum, in the next monetary policy to manage inflationary pressures,” said Naveen Kulkarni, Chief Investment Officer, Axis Securities.

11:13 (IST) 8 Jun 2022
We may see the food inflation coming down if monsoon expectations hold

“The inflation has been above the RBI's target range of 2-6% since the beginning of the year. With the ongoing Ukraine war and the COVID issues in China, the supply chain disruptions continue to affect global inflation. So, a rate hike of 30-50bps was expected by the RBI. The RBI has revised the inflation for FY23 to 6.7%, so inflation will continue to hurt the consumer pockets and company bottom-line for the coming quarters. We may see the food inflation coming down if the expectation of a normal monsoon this season turns out to be true. CRR was expected to be raised, but it seems RBI has decided to maintain the liquidity with banks for now.”

~ Raghvendra Nath, Managing Director – Ladderup Wealth Management

10:59 (IST) 8 Jun 2022
Domestic inflation outlook uncertain

“The tense global geopolitical situation and the consequent elevated commodity prices impart considerable uncertainty to the domestic inflation outlook,” Das said.

10:56 (IST) 8 Jun 2022
RBI may hike repo rate by another 35 bps in August

“We expect 35 bps repo rate hike in the August policy to 5.25% and repo rate at 5.75% by end-FY2023. Along with pushing the repo rate to above the pre-pandemic level, a 35 bps hike would also signal a gradual normalization in the policy actions while being adequately hawkish. We also expect another 50 bps hike in CRR to 5% by end-FY2023 to move the liquidity conditions towards the pre-pandemic levels.”

~Suvodeep Rakshit, Senior Economist at Kotak Institutional Equities

10:55 (IST) 8 Jun 2022
RBI’s tone continues to be hawkish

“The June policy was a continuation of the off-cycle policy with the focus remaining squarely on inflation. The RBI’s decision of hiking repo rate by 50 bps as well as increasing inflation estimate by 100 bps were in line with market expectations. The tone of the policy continues to be hawkish and we expect the RBI to continue hiking repo rate to ensure a neutral to marginally positive real policy rate.”

~Suvodeep Rakshit, Senior Economist at Kotak Institutional Equities

10:54 (IST) 8 Jun 2022
Advanced economies causing volatility

“The faster pace of monetary policy normalisation undertaken by systemic advanced economies (AEs) is leading to heightened volatility in global financial markets. This is reflected in sharp corrections in major equity markets, sizeable swings in sovereign bond yields, US dollar appreciation, capital outflows from EMEs and even from some AEs,” said RBI Governor Das.

10:50 (IST) 8 Jun 2022
RBI recognises the seriousness of inflation

“RBI's projections of GDP growth rate of 7.2% and inflation of 6.7% for FY23 reflect a realistic monetary policy. The higher inflation projection indicates that the central bank recognises the seriousness of inflation and the 50 bp repo rate hike is a message that they are determined to anchor inflation expectations. The Governor's remark that 'the economy remains resilient and recovery has gathered momentum' is bullish from the market perspective. The bond market's positive response with bond yields rising stems from the absence of CRR hike,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

10:46 (IST) 8 Jun 2022
RBI will assess inflation pressures and balance risks to growth: Das

India's recovery proceeding is at pace offering space for orderly policy shift. While we will continuously assess evolving situation to tailor our response, our actions must demonstrate commitment to keep inflation and inflationary expectations under check. Therefore monitoring and assessing inflation pressures and balancing risks to growth, will be crucial for judging appropriate path.' Shaktikanta Das

10:43 (IST) 8 Jun 2022
Revised rates

The standing deposit facility (SDF) rate stands adjusted to 4.65 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 5.15 per cent.

10:43 (IST) 8 Jun 2022
Focus on withdrawal of accommodation

“The MPC also decided to remain focused on the withdrawal of accommodation to ensure,” the MPC statement said. The MPC was earlier focused on accommodation while still remaining accommodative.

10:40 (IST) 8 Jun 2022
No CRR hike

No CRR hike has been announced by the RBI today. The CRR remains at 4.5%.

10:39 (IST) 8 Jun 2022
Normal monsoon and lower crude oil price

With the assumption of a normal monsoon in 2022 and an average crude oil price (Indian basket) of $105 per barrel, inflation is now projected at 6.7 per cent in 2022-23.

10:37 (IST) 8 Jun 2022
Liquidity still in surplus

“Overall system liquidity remains in large surplus, with the average daily absorption under the LAF moderating to Rs 5.5 lakh crore during May 4 – May 31 from Rs 7.4 lakh crore during April 8 – May 3, 2022 in consonance with the policy of gradual withdrawal of accommodation,” said RBI Governor Das.

10:36 (IST) 8 Jun 2022
RBI raises co-operative banks’ housing loan limits by 100%

RBI has raised housing loan limits for co-operative banks by 100 per cent.

10:36 (IST) 8 Jun 2022
Recovery proceeding well

“India's recovery proceeding. Our actions must demonstrate the commitment to keep inflation and expectations in check,” Das said. He added that the MPC decision is to maintain price stability.

10:34 (IST) 8 Jun 2022
RBI raises e-mandates limit to Rs 15,000

RBI raises limit of e-mandates to Rs 15000 from Rs 5000.

10:32 (IST) 8 Jun 2022
More rate hikes to come

“The 50 bps repo rate hike comes on the back of persistence of elevated inflation and the continued upside risks. Given that inflation is expected to remain above 6% through 3QFY23, RBI had to frontload its actions. We continue to see another 60-85 bps hike in rest of FY23 to manage inflationary expectations,” said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.

10:32 (IST) 8 Jun 2022
UPI linking to RuPay credit cards

Linking of RuPay credit cards to UPI will now be allowed. RBI said that this will increase the convenience for users and enhance the scope of digital payments.

10:31 (IST) 8 Jun 2022
RBI permits RCBs to extend finance to commercial real estate

RBI permit rural rural cooperative banks to extend finance to commercial real estate ie residential housing projects, Das said.

10:28 (IST) 8 Jun 2022
India’s forex reserves remain above $600 bln

As on June 3, 2022, India's forex reserves stand at $601.1 billion, RBI Governor Das said.

10:27 (IST) 8 Jun 2022
‘India’s banking system remains strong’ : Governor Das

'India's banking system remains strong. Bank credit has improved recently.' – Governor Das

10:25 (IST) 8 Jun 2022
RBI will ensure availability of adequate liquidity.

RBI will ensure availability of adequate liquidity, RBI Governor Das said. And central bank will ensure orderly completion of government's borrowing program, Das said.

10:23 (IST) 8 Jun 2022
Rupee performing better than peers

“Indian Rupee performing much better than EME peers,” Das said. He added that the Indian banking system remains strong as reflected by key indicators like profitability and provisions.

10:22 (IST) 8 Jun 2022
Monitoring G-sec market

“We are monitoring G-sec markets very closely and necessary steps will be taken as and when required,” the RBI governor said.

10:22 (IST) 8 Jun 2022
RBI Governor raises inflation projections above 6%

In FY 2023, Inflation for Q1, Q2, Q3 and Q4 is expected to be 7.5%, 7.4%, 6.2% and 5.8% respectively, with risks evenly balanced. It does not take into account RBI's policy rate hike of 50 bps on Wednesday.

10:20 (IST) 8 Jun 2022
Inflation projections raised to 6.7%

Inflation projections for FY 2023 raised to 6.7%.

10:20 (IST) 8 Jun 2022

Upside risks to inflation remain due to commodity price hike globally, elevated crude prices internationally, poultry feeds prices, and high tomato prices.

10:18 (IST) 8 Jun 2022
Inflation seen at 6.7%

Inflation is projected at 6.7% for the current fiscal year. RBI Governor said that Q1 inflation is expected to be at 7.5% while 7.4% in Q2. In Q3 inflation is seen at 6.2% before falling to 5.8% in Q4. 75% of the increase in inflation is attributed to food group.

10:17 (IST) 8 Jun 2022
Inflation surge across major categories

Surge in headline inflation seen across categories. Global geopolitical situation remains fluid and commodity markets on the edge, rendering heightened uncertainties to domestic conditions.

10:16 (IST) 8 Jun 2022
Real GDP growth projections for FY 2022-2023 is retained at 7.2%

Real GDP growth for FY 2022-2023 is retained at 7.2%, RBI governor Das said. GDP growth for Q1 is expected at 16.2%, for Q2 at 6.2%, Q3 at 4.1% and Q4 at 4%, Das added.

10:15 (IST) 8 Jun 2022
GDP growth projections retained

Read GDP growth for the current year has been retained at 7.2%. RBI believes Q1 will see GDP grow at 16.2% while Q2 GDP growth is expected to be at 6.2%, Q3 is seen at 4.1% and Q4 GDP numbers are expected to be at 4%.

10:14 (IST) 8 Jun 2022
Domestic business activities are seeing rebound amid global worries

The rebound in contact-intensive activities in urban areas to rebound, Das said. Business sentiments have remained high, according to early estimates, however global supply chain crisis remain a risk, he added.

10:12 (IST) 8 Jun 2022
Consumer confidence improving

RBI says surveys suggest improvement in consumer confidence in the year ahead.