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RBI MPC Meeting Highlights: November CPI expected to be high; Das stays mum on move to neutral stance
08 Dec, 2023 | 02:54:28 PM IST
RBI MPC Meeting LIVE News, RBI Monetary Policy Updates: RBI Governor Shaktikanta Das explained that the central bank avoids providing forward guidance due to the inherent uncertainty, particularly when addressing inquiries about the potential for policy rate reductions. He emphasized the unpredictable nature of the future, noting that unforeseen developments can impact any economy at any given time. Given that inflation has yet to align with the 4% target, he underscored the challenges in offering forward guidance within the current circumstances.
Our decisions are based on two major parameters i.e inflation and growth; inflation is our top priority now, said Shaktikanta Das in the post policy conference. He added that there's still a distance to cover to reach the 4% target.
The Reserve Bank of India's (RBI) Monetary Policy Committee unanimously decided to keep the repo rate- key lending rate- unchanged at 6.5%. The rate-setting panel also left the policy stance unchanged with focus on withdrawal of accommodation.
RBI revised its GDP growth forecast for the current fiscal year to 7 per cent, up from the previous estimate of 6.5 per cent, citing robust domestic demand and increased capacity utilization in the manufacturing sector.
During the announcement of the bi-monthly monetary policy, RBI Governor Shaktikanta Das acknowledged potential risks to the growth outlook, including prolonged geopolitical turmoil and global economic fragmentation.
Despite these concerns, the central bank opted to maintain interest rates at 6.5 per cent in the monetary policy statement.
The RBI's projections for the 2023-24 fiscal year indicate a real GDP growth of 7 per cent, with anticipated growth rates of 6.5 per cent and 6 per cent in the December and March quarters, respectively.
The forecasted growth for the first, second, and third quarters of the next fiscal year stands at 6.7 per cent, 6.5 per cent, and 6.4 per cent, respectively. In the concluded 2022-23 fiscal year, the Indian economy expanded by 7.2 per cent.
Notably, the RBI's growth projection exceeds those of international agencies such as the IMF, World Bank, ADB, and Fitch, which anticipate a 6.3 per cent expansion in the current fiscal year.
S&P, on the other hand, expects a growth rate of 6.4 per cent.
The RBI emphasized factors contributing to the positive outlook, including heightened public sector capex, robust capacity utilization in manufacturing, and strong domestic demand.
The total resources flowing into the commercial sector during the current fiscal year amounted to Rs 17.6 lakh crore, a significant increase from Rs 14.5 lakh crore the previous year.
Despite challenges in external demand, October saw positive trends in exports. The RBI anticipates that private consumption will benefit from rural demand, manufacturing, and a buoyant services sector.
Additionally, the healthy balance sheets of corporations, business optimism, and government infrastructure spending are expected to boost public sector capex, according to Governor Das.
Show moreOur decisions are based on two major parameters i.e inflation and growth; inflation is our top priority now, said Shaktikanta Das in the post policy conference. He added that there's still a distance to cover to reach the 4% target.
The Reserve Bank of India's (RBI) Monetary Policy Committee unanimously decided to keep the repo rate- key lending rate- unchanged at 6.5%. The rate-setting panel also left the policy stance unchanged with focus on withdrawal of accommodation.
RBI revised its GDP growth forecast for the current fiscal year to 7 per cent, up from the previous estimate of 6.5 per cent, citing robust domestic demand and increased capacity utilization in the manufacturing sector.
During the announcement of the bi-monthly monetary policy, RBI Governor Shaktikanta Das acknowledged potential risks to the growth outlook, including prolonged geopolitical turmoil and global economic fragmentation.
Despite these concerns, the central bank opted to maintain interest rates at 6.5 per cent in the monetary policy statement.
The RBI's projections for the 2023-24 fiscal year indicate a real GDP growth of 7 per cent, with anticipated growth rates of 6.5 per cent and 6 per cent in the December and March quarters, respectively.
The forecasted growth for the first, second, and third quarters of the next fiscal year stands at 6.7 per cent, 6.5 per cent, and 6.4 per cent, respectively. In the concluded 2022-23 fiscal year, the Indian economy expanded by 7.2 per cent.
Notably, the RBI's growth projection exceeds those of international agencies such as the IMF, World Bank, ADB, and Fitch, which anticipate a 6.3 per cent expansion in the current fiscal year.
S&P, on the other hand, expects a growth rate of 6.4 per cent.
The RBI emphasized factors contributing to the positive outlook, including heightened public sector capex, robust capacity utilization in manufacturing, and strong domestic demand.
The total resources flowing into the commercial sector during the current fiscal year amounted to Rs 17.6 lakh crore, a significant increase from Rs 14.5 lakh crore the previous year.
Despite challenges in external demand, October saw positive trends in exports. The RBI anticipates that private consumption will benefit from rural demand, manufacturing, and a buoyant services sector.
Additionally, the healthy balance sheets of corporations, business optimism, and government infrastructure spending are expected to boost public sector capex, according to Governor Das.
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RBI MPC Meeting LIVE: Keeping check on overnight rates
Liquidity constraints persist within the banking system, as reflected in the weighted average call rate. This metric, which serves as an indicator of the overnight interbank rate closely observed by the central bank, has consistently exceeded the Reserve Bank of India's (RBI) emergency funding rate of 6.75% throughout the majority of the preceding month.
The RBI may want to keep overnight rates above the policy rate “to facilitate faster transmission from the short end of the curve,” Rahul Bajoria, an economist at Barclays Plc, told bloomberg. “Still, we do not think the RBI is looking to tighten liquidity excessively, lest it hinder growth.”
The RBI may want to keep overnight rates above the policy rate “to facilitate faster transmission from the short end of the curve,” Rahul Bajoria, an economist at Barclays Plc, told bloomberg. “Still, we do not think the RBI is looking to tighten liquidity excessively, lest it hinder growth.”
RBI MPC Meeting LIVE: RBI's hawkish tone
The Reserve Bank of India (RBI) is expected to retain a vigilant stance, signaling the likelihood of sustained high interest rates. Despite asserting the autonomy of its monetary policy from the actions of the US Federal Reserve, the RBI acknowledges the interconnectedness of emerging market currencies, particularly in India, with the decisions of the Fed. It is anticipated that the RBI will not alter its policy stance unless there is a prior indication of a shift in the world's largest economy towards a more accommodative monetary approach.
RBI MPC Meeting LIVE: Rupee rises 3 paise to 83.33 against US dollar in early trade
RBI MPC Meeting LIVE: All looking at RBI's liquidity approach
With no rate action anticipated today, attention will be directed towards the Reserve Bank of India's (RBI) liquidity approach. In October, Governor Das indicated the possibility of the RBI engaging in the sale of bonds in the open market, a measure that would reduce liquidity and elevate short-term interest rates. Bond market participants are closely monitoring for indications that the RBI intends to implement this proposal.
RBI MPC Meeting LIVE: Expanding business operations
Companies are further diversifying their activities, contributing to the robust increase in investments. The expansion in gross fixed capital formation, serving as an indicator for investment, rose to 11.04% in the last quarter, up from 7.95% in the preceding three months.
RBI MPC Meeting LIVE: Barclays, Citi raise India's growth
Economists have significantly revised upward their annual forecasts for India's economy following the release of GDP data indicating robust growth in the last quarter, primarily driven by a surge in manufacturing. Barclays Plc and Citigroup Inc. now anticipate a 6.7% expansion for the fiscal year ending in March, marking an increase from their earlier projections of 6.3% and 6.2%, respectively. Various other analysts have also adjusted their estimates upward in response to the positive economic indicators.
RBI MPC Meeting LIVE: Retail inflation for industrial workers
In October, the retail inflation for industrial workers saw a decline to 4.45%, down from 4.72% in September, primarily attributed to reduced prices of specific food items. According to a statement from the Ministry of Labour, retail inflation, based on the All-India Consumer Price Index for Industrial Workers (CPI-IW), was recorded at 6.08% in October 2022.
RBI MPC Meeting LIVE: Private capex gaining steam
According to experts, robust growth of 7.6 percent in India's economy during the second quarter of this fiscal year, primarily fueled by a significant recovery in the manufacturing sector, indicates an upswing in private capital expenditure. Government data revealed that the country sustained its position as the fastest-growing large economy, with improved performance in manufacturing, mining, and services sectors contributing to the positive GDP numbers for the September quarter.
RBI MPC Meeting LIVE: India services exports
According to the provisional data by the Reserve Bank of India (RBI), India's service sector has demonstrated robust export growth, increasing by 10.8% and reaching $28.03 billion in October. In contrast, imports in the same sector experienced a slight decrease of 0.4%, totaling $13.46 billion during the corresponding period. This information slightly differs from the government's data released last month, which reported slightly higher figures, with service exports at $28.70 billion and imports at $14.32 billion for October.
RBI MPC Meeting LIVE: India's fiscal deficit hits 45 per cent of FY24 target in 7 months
During the initial seven months of the current fiscal year, India's fiscal deficit reached 45% of the annual budget estimate, slightly below the 45.6% deficit reported during the corresponding period in the previous year, as per data released by the Controller General of Accounts (CGA). In absolute figures, the fiscal deficit from April to October this year amounted to ₹8.03 lakh crore, compared to ₹7.6 lakh crore in the same period last year. The government has set the fiscal deficit target for FY24 at 5.9% of the GDP or ₹17.8 lakh crore.
RBI MPC Meeting LIVE: FDI proposals from neighbours
Since April 2020, the Indian government has received foreign direct investment (FDI) proposals amounting to approximately Rs 1 lakh crore from nations that share a land border with India. As of now, half of these applications have been approved, while the rest are either awaiting review, withdrawn, or rejected by the authorities.
Notably, a significant portion of these proposals originated from China. India has welcomed USD 2.5 billion in FDI equity from China between April 2000 and September 2023.
Notably, a significant portion of these proposals originated from China. India has welcomed USD 2.5 billion in FDI equity from China between April 2000 and September 2023.
RBI MPC Meeting LIVE: India fastest-growing economy, says FM
Finance Minister Nirmala Sitharaman stated that India has achieved the highest second-quarter growth globally, maintaining its position as the fastest-growing economy. Speaking in the Rajya Sabha during the Winter Session of Parliament, Sitharaman emphasized the positive economic activity observed across various sectors.
She also highlighted that India ranks as the second most desirable manufacturing location globally.
She also highlighted that India ranks as the second most desirable manufacturing location globally.
RBI MPC Meeting LIVE: RBI's treatment of rates
In October, Governor Shaktikanta Das expressed his desire for inflation to stabilize around the 4% target consistently. However, the escalation in food prices suggests that achieving this goal may be delayed until the latter part of the upcoming year. Additionally, India's growth in the last quarter exceeded the projections of the Reserve Bank of India (RBI), prompting policymakers to remain vigilant.
“The next two inflation readings could be close to 6%,” Pranjul Bhandari, an economist with HSBC Holdings Plc, told Bloomberg. Until food prices ease “the RBI may want to err on the side of caution in its treatment of rates.”
“The next two inflation readings could be close to 6%,” Pranjul Bhandari, an economist with HSBC Holdings Plc, told Bloomberg. Until food prices ease “the RBI may want to err on the side of caution in its treatment of rates.”
RBI MPC Meeting LIVE: CII on India's economic to grow
The Confederation of Indian Industry (CII) anticipates a growth rate of 6.8 percent for the country's economy in the ongoing fiscal year, with a further acceleration to 7 percent in 2024-25. This positive outlook is attributed to the government's persistent emphasis on infrastructure development and the facilitation of business operations. In an interview with PTI, R Dinesh, the President of CII and Executive Vice Chairman of TVS Supply Chain Solutions, expressed confidence in the projected gross domestic product (GDP) growth of 6.8 percent, even surpassing the earlier industry body estimate of 6.5-6.7 percent on a conservative basis.
RBI MPC Meeting LIVE: 'RBI unlikely to cut rates before June'
A recent report from Deutsche Bank suggests that the Monetary Policy Committee (MPC), led by the Reserve Bank, is not expected to make any adjustments to the repo rates until June of the following year. The ongoing bi-monthly MPC meeting commenced on Wednesday, with the announcement on rate decisions scheduled for Friday.
As per Deutsche Bank's analysis, it indicates that the current interest rate cycle has reached its highest point, and the Reserve Bank of India (RBI) is not anticipated to pursue additional increases unless deemed absolutely essential. The report suggests a potential rate reduction in June as part of the future monetary policy direction.
As per Deutsche Bank's analysis, it indicates that the current interest rate cycle has reached its highest point, and the Reserve Bank of India (RBI) is not anticipated to pursue additional increases unless deemed absolutely essential. The report suggests a potential rate reduction in June as part of the future monetary policy direction.
RBI MPC Meeting LIVE: Retail inflation likely to have increased in November
India's retail inflation is anticipated to have increased in November, primarily attributed to higher food prices, following a three-month decline. This surge is expected to bring the inflation rate closer to the upper threshold of the Reserve Bank of India's (RBI) target range of 2%-6%, as indicated by a Reuters poll. The rise in volatile food prices, constituting nearly half of the inflation basket, is notably influenced by essential items like onions, tomatoes, and pulses. According to a poll conducted from December 5 to 7, 41 economists forecast that the consumer price index (CPI) likely rose at an annual rate of 5.70% in November, surpassing the 4.87% recorded in October.
RBI MPC Meeting LIVE: Services sector activity in India hits 1-year low in Nov
The growth of the services sector in India reached its lowest point in a year in November due to subdued increases in new work intakes and output, despite a decrease in price pressures. The S&P Global India Services Business Activity Index, adjusted for seasonal variations, dropped from 58.4 in October to a one-year low of 56.9 in November. Despite the month-on-month decline, the expansion rate remained stronger than its long-run average. In terms of the Purchasing Managers' Index (PMI), a reading above 50 indicates expansion, while a score below 50 signifies contraction.
RBI MPC Meeting LIVE: Banks make NPA recovery worth Rs 7.17 lakh crore
During the past five fiscal years, banks have recorded a write-off of Rs 10.57 lakh crore, with Rs 5.52 lakh crore specifically attributed to loans associated with large industries, as disclosed by the government in Parliament on Tuesday.
Minister of State for Finance, Bhagwat Karad, shared, "According to RBI data, scheduled commercial banks (SCBs) have written off an aggregate loan amount of Rs 10.57 lakh crore during the last five financial years," in response to a query in the Rajya Sabha.
Additionally, scheduled commercial banks have successfully recovered Rs 7.15 lakh crore of non-performing assets (NPAs) over the same five-year period.
Minister of State for Finance, Bhagwat Karad, shared, "According to RBI data, scheduled commercial banks (SCBs) have written off an aggregate loan amount of Rs 10.57 lakh crore during the last five financial years," in response to a query in the Rajya Sabha.
Additionally, scheduled commercial banks have successfully recovered Rs 7.15 lakh crore of non-performing assets (NPAs) over the same five-year period.
RBI MPC Meeting LIVE: All waiting for RBI commentary on OMOs
RBI Governor Shaktikanta Das caused a surge in sovereign bond yields when he stated in the October policy announcement that the central bank planned to undertake Open Market Operations of government bonds to reduce excess liquidity. Although the RBI has not implemented these bond sales yet, the financial community is eagerly anticipating further commentary from the central bank on this matter.
RBI MPC Meeting LIVE: Incomplete transmission of past rate hikes
The RBI has openly addressed the issue of incomplete transmission of past rate hikes, as acknowledged by central bank economists in the previous month. RBI Governor noted that the speed at which bank deposit rates were rising lagged behind that of lending rates. In line with its strategy of withdrawing accommodation, the RBI has deliberately maintained tight liquidity in the banking system over the recent months, ensuring elevated borrowing costs.
RBI MPC Meeting LIVE: Some comfort from decrease in core inflation
What offers some comfort to the MPC is the significant decrease in core inflation in recent months, registering at approximately 4.20% in October, as noted by economists in an ET report. Core inflation excludes the unpredictable elements of food and fuel.
Madan Sabnavis, the chief economist at Bank of Baroda, pointed out, "We all recognize that food inflation is poised to rise once again. Given these circumstances, there may be justification for a pause in the repo rate. Nevertheless, considering the decline in core inflation, there is no basis for raising the rates."
Madan Sabnavis, the chief economist at Bank of Baroda, pointed out, "We all recognize that food inflation is poised to rise once again. Given these circumstances, there may be justification for a pause in the repo rate. Nevertheless, considering the decline in core inflation, there is no basis for raising the rates."
RBI MPC Meeting LIVE: Inflation worries
In October, inflation, as measured by the Consumer Price Index, showed a decline to a four-month low of 4.87%, approaching the Monetary Policy Committee's (MPC) target of 4%. However, the forecast for retail prices in the October-December period is uncertain due to the potential impact of increased food prices. The MPC is particularly concerned about the influence of weather disruptions in significant states like Maharashtra, Madhya Pradesh, Rajasthan, and Gujarat, which could lead to higher prices for pulses and onions. These two commodities collectively contribute a 1.6% weight to the food inflation basket.
RBI MPC Meeting LIVE: A likely revision in RBI's GDP growth projection
Considering the significant outperformance of GDP growth in July-September compared to initial expectations, the Reserve Bank of India (RBI) might find it necessary to scrutinize the fundamental demand dynamics within the economy. This is essential to prevent potential inflation risks stemming from a sudden surge in activity in specific sectors. Numerous analysts anticipate an upward revision of the RBI's GDP growth projection for the fiscal year 2023-24, potentially exceeding the initial estimate of 6.5%.
RBI MPC Meeting LIVE: Status quo to continue?
According to a survey of 10 economists conducted by ET, the Monetary Policy Committee (MPC) is expected to maintain the repo rate at 6.50% while adhering to its stance of withdrawing accommodation. Despite a series of increases totaling 250 basis points (2.5 percentage points) between May 2022 and February 2023, the committee has opted for a pause on the benchmark rate, representing the rate at which the RBI extends loans to banks.
Hello and welcome to ET's live coverage of RBI's MPC meet
Good morning, readers! Today marks a significant day as RBI unveils its rate, growth, and inflation decision. Stay tuned to this space for live updates and real-time analysis, providing comprehensive insights about the dynamic landscape of the Indian economy and banking system.
