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PremiumRBI Monetary Policy Meeting Highlights: The Reserve Bank of India (RBI) announced its fourth bi-monthly monetary policy for FY25 today, October 9. After a three-day meeting of the six-member RBI Monetary Policy Committee (MPC), the RBI Governor Shaktikanta Das announced that the rate-setting panel decided to keep the benchmark repo rate unchanged at 6.5% for the tenth straight meeting. However, the MPC changed the policy stance to ‘Neutral’ from ‘withdrawal of accommodation’. FY25 GDP growth estimates were retained at 7.2%, while CPI Inflation forecast for FY25 remained at 4.5%. Stay tuned to our RBI policy live blog for the latest updates.
RBI MPC Meeting Highlights: Here are the key takeaways of the RBI Policy today:
1] Policy Measures:
2] GDP Growth Estimates:
FY25 GDP growth estimates retained at 7.2%. Quarterly GDP growth estimates are -
3] CPI Inflation Forecast
FY25 CPI Inflation forecast unchanged at 4.5%. Quarterly inflation estimates are -
4] Additional Measures
The minutes of the RBI MPC meeting will be published on October 23.
The next RBI MPC meeting is scheduled from December 4 to 6.
RBI MPC Live Updates: We continue to see the possibility of a rate cut in Q4 2024. Despite the governors’ emphasis that monetary policy decisions are driven primarily by domestic considerations, we think that any rate cut action could end up being aligned with the timing of the Fed’s rate cut cycle to limit financial market volatility, said Abheek Barua, Chief Economist and Executive Vice President, HDFC Bank.
RBI MPC Live Updates: While the stance was changed to neutral, the RBI still retains a hawkish tilt by indicating that they would remain watchful on inflation and be “unambiguously" focused on durably aligning inflation to the 4% mark. What the stance change thus means is that the RBI sees a possibility forming for a rate cut but would still want to keep a close watch on shifting risk perspectives and its consequent impact on India inflation - both higher and lower, said Indranil Pan, Chief Economist at Yes Bank.
RBI MPC Live Updates: Given the global rate cut momentum, domestic growth and inflation projections, it’s very likely that rate cut will happen sooner than current expectations. The broader consensus is that it may happen by Feb policy. Stance change in this policy was much earlier than market expectation. Based on this, we believe a rate cut may happen sooner than current market expectation of February policy meeting. More important is to assess the terminal repo rate in the ensuing easing cycle. We expect cumulative rate cuts of about 50-75 basis points, said Mahendra Kumar Jajoo, CIO – Fixed Income, Mirae Asset Investment Managers (India).
RBI MPC Live Updates: We don’t treat banks and NBFC or any other financial intuitions as adversaries. We work closely with them in a spirit of cooperation and as I have said in my statement, we always expect self correction and we give enough time to them, whether it’s a bank or an NBFC, to take corrective measures at their end. We encourage them to do that. So it’s not an adversarial relationship. But as a regulator and supervisor of the financial system of the country, it’s our duty to point out where we see possible or potential risks becoming more serious and advise them to take corrective actions, said RBI Governor Shaktikanta Das.
RBI MPC Live Updates: RBI had identified certain deficiencies in the operations of gold loan companies. We have set a specific timeline for these companies to address and rectify the discrepancies, said RBI Deputy Governor Swaminathan J.
RBI MPC Live Updates: There is no evidence of higher interest rates impinging on economic growth. Higher rates have been there for over one year and growth is holding steady. Economic activity has been well sustained, said RBI Governor Shaktikanta Das.
RBI MPC Live Updates: RBI Deputy Governor Michael Patra said that the outlook for crude oil prices was softer than it is today. This is because Opec+ is planning to restore production in phased manner through 2025, and international energy estimates softer demand for crude oil, and increasing renewables. All these factors make for softer crude oil price outlook, Patra said.
RBI MPC Live Updates: Earlier I used elephant for inflation, and now I am using horse because its a war against inflation and in wars, elephants and horses are used historically, said RBI Governor Shaktikanta Das.
RBI MPC Live Updates: We want to see off the current hump in inflation before considering next move on rates, says RBI Deputy Governor Michael Patra.
RBI MPC Live Updates: RBI Deputy Governor Michael Patra said that the current holding of government bonds by foreigners was just about 3%.
RBI MPC Live Updates: Overall NBFC sector is in good health. Messaging targeted towards NBFC pursuing high risk high growth strategies and also for certain segments that are likely to get into stress, said RBI Deputy Governor Swaminathan.
RBI MPC Live Updates: Greater confidence that inflation is moderating but we are acutely aware that there are significant risks. We have changed our policy stance because there is a well poised balance between growth and inflation. The timing is appropriate for a stance change. Neutral stance gives optionality and flexibility to make decisions, said RBI Governor Shaktikanta Das.
RBI MPC Live Updates: India’s growth story remains intact. There is a need for greater vigilance on inflation, said RBI Governor Shaktikanta Das.
RBI MPC Live Updates: The policy decision this time around wasn’t easy, and was indeed tricky for the RBI to find a balance in its policy biases with so many moving pieces. The MPC had a lot to process on domestic and external front. No rate action, in conjunction with stance change to neutral with stress on being 'actively disinflationary' is indeed their best bet to prep ground for start of a shallow easing cycle, possibly but not necessarily from December, said Madhavi Arora, Lead Economist, Emkay Global Financial Services.
The Gsec market has rejoiced the stance change and this, in conjunction with announcement of FTSE EMBI inclusion, has led to a 7-8bps rally in 10-yr yield from yesterday’s levels. The Repo-10yr spread has now compressed to 25bps. Any further rally would be capped till we actually see a commencement of the secular rate cut cycle, Arora added.
RBI MPC Live Updates: RBI Governor Shaktikanta Das begins post-monetary policy press conference
RBI MPC Live Updates: The RBI announced a balanced monetary policy, opting to keep interest rates unchanged while shifting its stance to neutral. The overall tone remained positive from the market’s perspective. While there was no explicit mention of a rate cut, subtle cues in the governor’s speech hint at the possibility of a rate reduction in upcoming policies, said Santosh Meena, Head of Research at Swastika Investmart.
He expects markets to respond positively, with Nifty likely targeting the 25,330 and 25,500 levels in the near term. Similarly, Bank Nifty could aim for 51,700 and 52,300 as immediate targets.
RBI MPC Live Updates: While the MPC has not provided any clear guidance on the rate cuts, it is likely that it will go for a rate cut in December 2024 or February 2025, provided the inflationary environment is stable and the headline inflation is consistently within 4.5% in the next few months, said Suman Chowdhury, Chief Economist and Executive Director, Acuité Ratings & Research.
The other important takeaway in the MPC statement is the early warning sounded out to the NBFC sector. It was also a signal to the banking sector to remain cautious on their exposure to the NBFC sector. In our opinion, this will slow down bank credit growth to the sector in the near term and also lead to higher mobilization of funds through the bond market, Chowdhury added.
RBI MPC Live Updates: Over the last couple of weeks, the 10-year benchmark G-sec yields have risen by around 10 basis points due to these factors. However, if these global challenges prove temporary, we might see a rate cut in the next policy cycle. In this context, long-term bonds with current yields look attractive, and investors may want to consider locking them in, especially if global tensions ease and domestic economic indicators remain stable, said Suresh Darak, Founder of Bondbazaar.
RBI MPC Live Updates: Indian stock market benchmark indices traded higher after RBI policy announcement. The RBI’s MPC kept the repo rate unchanged at 6.5% and changed the policy stance to ‘Neutral’ from “Withdrawal of Accommodation’.
Sensex traded 648.39 points, or 0.79%, higher at 82,283.20, while the Nifty 50 was up 210.25 points, or 0.84%, at 25,223.40.
RBI MPC Live Updates: The Bank Nifty gained more than 1% post the monetary policy outcome on Wednesday. The Bank Nifty that opened at 51,161.75, however gathered strength post the RBI monetary policy outcome and rose to highs of 51,707.15 marking gains of more than 1%. Bank Nifty was trading 447.70 points, or 0.88%, higher at 51,468.70.
Punjab National Bank (PNB), State Bank of India (SBI), Axis Bank, ICICI Bank and Canara Bank were the top gainers on the Bank Nifty index.
RBI MPC Live Updates: At present, UPI and Immediate Payment Service (IMPS) provide a facility for the remitter of funds to verify the name of the receiver (beneficiary) before executing a payment transaction. It is now proposed to introduce such a facility for the Real Time Gross Settlement System (RTGS) and the National Electronic Funds Transfer (NEFT) system. This facility will enable the remitter to verify the name of the account holder before effecting funds transfer to him/her through RTGS or NEFT. This will also reduce the possibility of wrong credits and frauds.
RBI MPC Live Updates: To provide more flexibility and avenues for Urban Co-operative Banking (UCB) to raise capital, RBI will issue a Discussion Paper on Capital Raising Avenues for UCBs for feedback and suggestions from stakeholders.
RBI MPC Live Updates: The NBFCs may review their prevailing compensation practices, variable pay and incentive structures some of which appear to be purely target driven in certain NBFCs. Such practices may result in adverse work culture and poor customer service, said RBI Governor.
RBI MPC Live Updates: Driven by the significant accretion to their capital from both domestic and overseas sources, and sometimes under pressure from their investors, some NBFCs – including microfinance institutions (MFIs) and housing finance companies (HFCs) – are chasing excessive returns on their equity. While such pursuits are in the domain of the Boards and Managements of NBFCs, concerns arise when the interest rates charged by them become usurious and get combined with unreasonably high processing fees and frivolous penalties. These practices are sometimes further accentuated by what appears to be a ‘push effect’, as business targets drive retail credit growth rather than its actual demand. The consequent high-cost and high indebtedness could pose financial stability risks, if not addressed by these NBFCs, said Governor Das.
First, it is observed that some NBFCs are aggressively pursuing growth without building up sustainable business practices and risk management frameworks, commensurate with the scale and complexity of their portfolio. An imprudent ‘growth at any cost’ approach would be counter productive for their own health.
RBI MPC Live Updates: The Reserve Bank will continue to be nimble and flexible in its liquidity management operations. We will deploy an appropriate mix of instruments to modulate both frictional and durable liquid, said RBI Governor Shaktikanta Das.
RBI MPC Live Updates: The global economy has remained resilient since the last meeting of the MPC, although downside risks from increasingly intense geopolitical conflicts, geoeconomic fragmentation, financial market volatility and elevated public debt continue to play out. Manufacturing is showing signs of slowdown, while services activity is holding up. World trade is exhibiting improvement. Inflation is softening, supported by lower energy prices. Growing divergence in inflation-growth dynamics across countries has resulted in varying monetary policy responses, says Governor Shaktikanta Das.
RBI MPC Live Updates: Self-correction by NBFCs would be the desired option, though the RBI is keeping a close watch and won’t hesitate to take action if required, said Governor Shaktikanta Das.
RBI MPC Live Updates: There has been some recent commentary on the likelihood of stress buildup in a few unsecured loan segments like loans for consumption purposes, micro finance, loans and credit card outstanding. The Reserve Bank is closely monitoring the incoming information and will take measures as may be considered necessary. Banks and NBFC on their part need to carefully assess the individual exposures in these areas, both in terms of size and quality. Their underwriting standards and post-sanction monitoring has to be robust. Continued attention also needs to be given to potential risks from inoperative deposit accounts, cyber security landscape, mule accounts, and a few other factors, said RBI Governor Das.
RBI MPC Live Updates: RBI to enhance the per-transaction limit for UPI 1 2 3 Pay to ₹10,000 from ₹5,000. Additionally, the UPI Lite wallet limit has been raised from ₹2,000 to ₹5,000, and the per-transaction limit for UPI Lite has also been enhanced, increasing from ₹100 to ₹500.
RBI MPC Live Updates: RBI will create database called RBI Climate Risk System, says Governor Shaktikanta Das.
RBI MPC Live Updates: During the current financial year, the exchange rate of Indian rupee remained largely range bound. The Indian rupee also continued to be the least volatile currency among other emerging market currencies. The lower volatility of the Indian rupee reflects India’s strong macroeconomic fundamentals and improved external sector outlook, says RBI Governor Shaktikanta Das.
RBI MPC Live Updates: Indian stock market indices traded higher after the announcement of RBI monetary policy decision. The central bank kept the key repo rate unchanged at 6.5% and changed the policy stance to ‘neutral’. GDP growth estimates for FY25 were retained at 7.2%, while CPI inflation forecast for FY25 was also unchained at 4.5%.
The BSE Sensex was trading 308.34 points, or 0.38%, higher at 81,943.15, while the NSE Nifty 50 was up 110.30 points, or 0.44%, at 25,123.45.
RBI MPC Live Updates: Indian bonds yields drop after RBI changes policy stance to ‘Neutral’ from ‘Withdrawal of Accomodation’. The benchmark 10-year bond yield eased 5 bps to 6.7434%.
RBI MPC Live Updates: Inflation horse has been brought to the stable within the tolerance band. We have to be careful about opening the gate, said RBI Governor Shaktikanta Das
RBI MPC Live Updates: RBI kept CPI Inflation estimate for FY25 unchanged at 4.5%. Quarterly estimates are -
RBI MPC Live Updates: RBI maintained FY25 GDP growth estimates at 7.2%. Here are quarterly estimates
RBI MPC Live Updates: Government consumption is improving. 8 core industries output fell by 1.8% in Q1, noted Governor Shaktikanta Das.
RBI MPC Live Updates: RBI Monetary Policy Committee keeps repo rate unchanged at 6.5%, changes policy stance to ‘Neutral’
RBI MPC Live Updates: The RBI Governor Shaktikanta Das has begun his monetary policy speech.
RBI MPC Live Updates: Watch RBI policy speech on Livemint’s YouTube channel here
RBI MPC Live Updates: This RBI policy is likely to be interesting, especially as new external members take positions. Data in the form of a PMI dip, fall in 2-wheeler and PV growth, dip in personal loans etc. point to a slowdown story for India. This has led to some noises, backed by the start of a Fed rate cycle, for at least a change in the stance by the RBI, if not a rate cut. We think while growth is slowing, it is not crashing. On the other hand, the RBI had been communicating its commitment towards bringing inflation durably to the 4% mark. There has been progress towards that direction with good rains and healthy reservoir levels suggesting comfort on food inflation in months ahead, said Indranil Pan, Chief Economist, Yes Bank.
But the RBI will have to be guarded of global risks to inflation emanating from a sudden jump in the commodity prices, a China recovery etc. With growth not showing signs of crashing but with some lingering risks on the prices side, we see the best bet for RBI to continue to stay on the sidelines. Every policy becomes live from here on, and incoming data will determine RBI’s reaction function. Even as uncertainty exists on the timing of the start of the rate cut, for sure this cycle will be shallow to the extent of only a 50-75 bps easing, Pan added.
RBI MPC Live Updates: The real estate sector has witnessed robust growth in recent years in the context of continuous demand. The repo rate plays a crucial role in determining home loan interest rates and hence, in this context, rate cut would serve as a big boost to homebuyer sentiment and enable better affordability, which is an extremely sensitive factor in the housing market. We hope to see lower interest rates which will provide an impetus to not just real estate and housing demand but across industries and economic growth, said Ramani Sastri - Chairman & MD, Sterling Developers.
Moreover, as the festive season approaches, it presents a golden opportunity to reinvigorate the real estate market with reduced interest rates ahead of the festive season, which is a crucial period for real estate sales. As India's economy continues to grow, there is no hesitation among the homebuyers to invest in residential real estate for long-term returns. Overall, the market outlook is certainly positive and given the confidence built this year, we do believe that markets will continue to see sustained growth over the next few years, providing appealing prospects for both first-time buyers and seasoned investors, Shastri added.
RBI MPC Live Updates: Here are key takeaways from the August RBI Policy:
1] Policy Measures:
2] GDP Growth Estimates:
FY25 GDP growth estimates retained at 7.2%. Quarterly estimates are -
3] CPI Inflation Forecast
FY25 CPI Inflation forecast unchanged at 4.5%. Quarterly estimates are -
4] Additional Measures
RBI MPC Live Updates: Indian rupee opened higher on Wednesday ahead of the RBI’s repo rate decision. The local currency gained 6 paise to open at 83.91 per US dollar as against its previous close of 83.97 a dollar.
RBI MPC Live Updates: Improving liquidity conditions both globally and domestically, and looking at the recent issue of deposit mobilisation by the banks makes us believe that in the October 2024 policy, RBI’s move will be targeted towards supported measures for banks, helping them to garner deposits and benefit from current falling interest rates scenario. In the upcoming policy we expect RBI to disassociate from the interest rate developments globally and take view on the domestic rates based on evolving conditions of domestic inflation and growth dynamics, said Prashant Pimple, Chief Investment Officer - Fixed Income, Baroda BNP Paribas Mutual Fund.
RBI MPC Live Updates: Indian stock market opened higher on Wednesday ahead of the RBI’s monetary policy announcement. The Sensex opened 319.77 points, or 0.39%, higher at 81,954.58, while the Nifty 50 gained 52.65 points, or 0.21%, to open at 25,065.80.
RBI MPC Live Updates: The fluidity of global narratives in conjunction with comfortable banking liquidity, easy financial conditions on net, incipient weakness in growth, noisy food inflation, and the still-elusive 4% inflation target etc, would make it tricky for the RBI to find a balance in its policy biases. While today’s policy may not see any rate action, a stance change to neutral with stress on being ‘actively disinflationary" would be MPC’s best bet to prep ground for start of a shallow easing cycle, possibly from December, said Madhavi Arora, Lead – Economist at Emkay Global Financial Services.
RBI MPC Live Updates: The Reserve Bank of New Zealand slashed the cash rate by 50 basis points to 4.75% and said it assesses that annual consumer price inflation is within its 1% to 3% inflation target range.
