KEY HIGHLIGHTS
Rate Cut Transition Ongoing: Patra
Transition over a period of time is going on, and we feel as mobilising of deposits at a high and higher rate, transition will continue, said Deputy Governor Michael Patra.
Global Factors Weighing On Governor's Mind: Siddarth Bhamre
Challenges in the form of food inflation volatility, geo-political tensions and disruption in supply channels, said Siddarth Bhamre, Head of Institutional Research, Asit C Mehta Investment Interrmediates.
"Global factors are weighing high on governor's mind. In advanced economies, inflation remains sticky because of tight labour markets. Significantly higher Debt to GDP ratio may pose financial threat in adverse situations," he said.
No Need To Amend 'Small Finance Bank' Tag: Deputy Governor Rao
Having the tag of Small Finance Bank is part of the differentiation, said Deputy Governor Rajeswar Rao. See no need to review the necessity of the 'small finance bank' tag, he said
Can't Give Guidance On Rate Cuts, Says Governor
RBI Governor Shaktikanta Das said that he can’t give forward guidance on future rate action, in response to a question from NDTV Profit's Vishwanath Nair.
Our monetary policy is primarily guided by domestic conditions, he said. We do not follow the footsteps of the U.S. Fed, he further added.
Real Rates Matter But Inflation Targeting MPC's Primary Objective, Says Patra
Primary objective is to align inflation with the target, said Deputy Governor Michael Patra.
Real rates matter, but the primary objective of monetary policy is inflation targeting, he said
Actors Behind Food Inflation Keep Shifting: Patra
Worried that there should not be a spillover of food inflation to CPI inflation, said Deputy Governor Michael Patra.
Food inflation has been highly volatile, reiterated Patra.
There are indications that food inflation could remain high, he said. In the case of food inflation, actors keep shifting, he further said, adding that this time it's proteins.
Norms Deferred After Feedback: Das
Received feedback and requests that more time is needed to conform with circular on exchange traded currency derivatives, said Governor Shaktikanta Das.
RBI deferred the circular to May 3 from April 5 on Thursday.
Exposure Is Mandatory For Exchange-Traded Currency Derivatives: Patra
Rules state that exchange traded currency derivatives are only for hedging purposes, but some market participants have been misusing the facility, said Michael Patra.
Moot point is that underlying exposure is mandatory for exchange traded currency derivatives, he said.
Interpretation that relaxation in documentary evidence is tantamount to no underlying exposure is wrong, he clarified.
Policy On Forex Risk Management Consistent: Patra
"RBI’s policy on forex risk management has remained consistent over last few years. There is no change in policy approach on forex risk management," said RBI Deputy Governor Michael Patra.
We typically issue statements after market hours, he said.
Vegetable Prices Have To Be Watched: Das
Wheat availability will not be affected too much but vegetable prices have to be watched, said Shaktikanta Das.
On upcoming climatic conditions, Das clarified that he has not said heatwaves, but rather higher temperatures.
Currency Stability RBI's Priority: Das
Currency stability has always been a priority of the RBI, said Governor Shaktikanta Das.
Have consciously built up forex reserves over last few years.
Forex reserves act as a buffer against future risks.
Inflation Cooling, GDP Robust, Says Das
Key Highlights of MPC’s April Review:
Inflation moderating, GDP growth is robust
MPC remains focused on aligning inflation to target on durable basis; derive satisfaction in progress made, but task not finished
Financial sector continues to be stable
External sector remains resilient
RBI to focus on preserving financial stability, promoting financial sector, payment system that is robust, resilient and future ready over next 10 years
The policy overall is on expected lines, said Das, adding that RBI, market participants, players, media and analysts are aligned on thinking on monetary policy
RBI May Cut Rates By Mid-2024: Crisil's Dharmakirti Joshi
With inflation trends mixed, the MPC is preferring to wait for clearer signs of easing towards its 4% target, said Dharmakirti Joshi, chief economist at CRISIL.
"Easing food inflation and benign non-food inflation should bring headline inflation closer to the RBI’s target of 4%. That said, any weather disruptions and sustained uptick in crude oil prices will remain monitorable," said Joshi.
The transmission impact of rate hikes since May 2022 and regulatory measures on risky lending are still playing out, he noted.
As per the rating agency's base case, RBI is likely to be in a position to cut rates by mid-2024, Joshi said. Oil prices and poor monsoon may play spoilsport to this theory, he added.
RBI To Move To 'Gracklish' From 'Hawk-Dove' Signalling: Madhavi Arora
The decision to maintain status quo for the seventh time in a row "suggests that when needed, the aim of financial stability may even precede inflation management," said Madhavi Arora, lead economist, Emkay Global Financial Services.
The fluidity of global narratives and policy repricing, along with the near-term problem-of-plenty on INR/bonds, could make it arduous for the RBI to find a balance in its policy biases, she said.
Considering this, RBI’s tone will slowly tiptoe to ‘Gracklish’ from the usual ‘Hawk-Dove’ signaling, implying a non-committal stance and limited definite forward guidance ahead, said Arora.
"While bull-steepening of India bonds looks to be a popular trade, consistent repricing of Fed cuts could spill over into the RBI’s reaction function and will be cyclically noisy for bonds/FX," she further added.
Shaktikanta Das To Answer Post Policy Questions | Watch Live
RBI Governor Shaktikanta Das will address a press conference after the monetary policy announcement in a short while from now.
Watch live and catch the latest update from the interaction here.
Status Quo To Sustain Real Estate Momentum: Anuj Puri
Keeping the repo rate unchanged will help sustain the momentum in real estate sector, said Anuj Puri, Chairman, Anarock Group.
"The decision to maintain status quo will keep the ongoing residential real estate sales momentum on course and unimpeded. Aspiring homebuyers eyeing a purchase will proceed with confidence," he said.
Policy Decision Favours Homebuyers And Developers: Samantak Das
The RBI's decision to maintain status quo is a welcome development for the Indian housing market, said Samantak Das, chief economist and head – research and REIS, India, JLL.
The policy continuity fosters a predictable interest rate environment, which is crucial for both homebuyers and developers, he said. "We anticipate sustained demand, especially in the mid-tier and high-income segments."
Growth Target Achievable, Markets May Have To Wait For Rate Cuts: Lakshmi Iyer
The key focus of the policy is to be actively disinflationary, noted Lakshmi Iyer, CEO-Investment & Strategy, Kotak Alternate Asset Managers Limited said. "This is understandable given the 15% rise in crude oil prices since February 2024."
"It may be too pre mature for India to relent on rate cuts ahead of U.S. Fed for now. Growth projections are modest and seem achievable, headline inflation too... is broadly in line with our expectations," Iyer said.
Markets may need to wait longer for rate cuts, she said.
Allow Third Party Apps For Payments From PPI Wallets: Das
To permit use of third party UPI apps for making payments from PPI wallets, said Das
Distribution of retail CBDC to be allowed through non-bank payment system operators, he added.
SFBs Can Use Permissible Rupee Interest Derivate Products: Das
RBI will allow small finance banks to use permissible rupee interest derivate products, said Shaktikanta Das.
It will also facilitate deposit of cash in cash deposit machines using UPI, he said.
RBI Mobile App For Retail Direct Portal In The Cards: Das
RBI will introduce a mobile app for its retail direct portal, said Shaktikanta Das.
The central bank to take up comprehensive review of liquidity coverage ratio norms for banks, he said.
RBI Confident Of Meeting External Requirements: Das
The central bank remains confident of meeting external requirements, said Shaktikanta Das.
It is RBI’s prime focus to build strong buffer in the form of substantial forex reserves.
Alert: RBI forex reserves are now at record high.
Current Account Deficit Narrows, FPI Inflows At $41.6 Billion: Das
Net FPI inflows stood at $41.6 billion, compared with outflows in FY22, FY23, said the RBI Governor.
Current Account Deficit narrowed significantly in first three quarters of FY24.
India continues to remain the largest recipient of foreign remittances.
India's FPI flows saw significant turnaround in FY24.
Net FDI investments moderated in FY24.
RBI Will Continue To Constructively Engage With Financial Entities, Says Das
RBI will continue to constructively engage with financial sector entities, said Shaktikanta Das
Financial stability is a joint responsibility of all stakeholders, he said
Rupee Most Stale Among Major Currencies: Das
Indian rupee remained largely rangebound, and the most stable among major currencies, said Shaktikanta Das.
Compared to previous three years, rupee exhibited lowest volatility in FY24, Das said. Relative stability of rupee reflects sound macroeconomic fundamentals, external position, he added.
Liquidity Situation Improved In March: Das
India’s liquidity situation improved in March, said Shaktikanta Das. Anticipating seasonal tightening, RBI injected liquidity at the end of March, he added.
Average borrowings under MSF window moderated.
Liquidity conditions eased again, necessitating VRRR auctions.
Weighted average call rate displayed softening bias.
Rates in collateralised segment also moderated.
Monetary transmission in credit market is WIP.
Food Inflation Remains Volatile: Das
Food inflation continues to exhibit volatility, impeding disinflation process, said Shaktikanta Das.
"Elephant (inflation) has now gone out for a walk, heading to the forest. We would like the elephant (inflation) to remain in the forest," he said.
Ongoing effort is to execute fuller transmission of policy measures
Will continue unwaveringly focussing on inflation
In the past, elephant in the room was inflation.
CPI Inflation In FY25 Seen At 4.5%
CPI inflation in Q1 seen at 4.9%, Q2 at 3.8%, Q3 at 4.6%, and Q4 4.5%, said Shaktikanta Das.
International food prices remain benign
Output of key vegetables remain key monitorable owing to weather forecasts
Climate shocks pose upside risk for domestic, international food prices
Recent uptick in crude oil prices need to be monitored closely
Continuing geopolitcal tensions also pose upside risk to crude prices
Real FY25 GDP Growth Projected At 7%
Real GDP growth for FY25 is projected at 7%, with Q1 at 7.1%, Q2 at 6.9%, and 7% in Q3 and Q4, said Shaktikanta Das.
Prospects of investment activity remain bright because of persisting and robust govt capital expenditure, Healthy balance sheets of banks and corporates, increasing capacity utilisation, strengthening business optimism, he said.
Risks to GDP projections are evenly balanced, Das said, adding that early indication of normal monsoon bodes well for kharif season.
Above normal temperatures expected to prevail in April-June
Frequent climate shocks provide upside risks to domestic, international food prices.
Flow Of Resources To Commercial Sector Significantly Higher Than Previous Years, Says Das
Total flow of resources to commercial sector seen at Rs 31.2 lakh crore in FY24, with is significantly higher than previous years, says Shaktikanta Das.
Agri and rural output appears bright
External demand improved in Feb, with exports growing in double digits
Outlook for agriculture, rural activity appears bright
Trade deficit has widened
Prospects of investment activity remain bright
Consumption To Improve This Fiscal, Says Das
With rural demand catching up, consumption is expected to improve in 2024-25, says Shaktikanta Das.
Industrial activity led by manufacturing continued its momentum
PMI for manufacturing displayed sustained expansion in February, March.
Services exhibited broad-based buoyancy with all sectors registering strong growth.
Services PMI remained above 60 in Feb and March
High Public Debt Could Erupt, Warns Das
High public debt is a dormant risk which could erupt, warns RBI Governor Das
Equity markets have gained while bond yields and US dollar remain volatile
Worsening debt in advanced economies can create spill-overs for emerging market economies
EMEs with rising public debt are vulnerable to spill-over effect
Global Economy Resilient: Das
Global economy has remained resilient, says the RBI Governor, adding that global trade is expected to grow fast in 2024.
Services inflation remains sticky in advanced economies.
Equity markets have gained while bond yields, dollar remained volatile.
Inflation moving closer to targets, but last mile turning out to be challenging.
Debt to GDP ratio remained elevated, projected to rise further.
Debt sustainability concerns rising globally.
Monetary Policy Must Continue To Be Deflationary: Das
Monetary policy must continue to be deflationary, says Shaktikanta Das,
MPC will remain resolute in its commitment to aligning inflation with target, he says.
Core Inflation On The Decline, Says Das
Core inflation declined steadily over the last nine months, says RBI Governor Shaktikanta Das.
Fuel component of CPI remained in deflation for six months, Das says, adding that robust growth prospects provide policy space to remain focused on inflation.
Repo Rate Unchanged At 6.5%
Five of six MPC members voted to keep policy repo rate unchanged at 6.5%. The panel maintained policy stance as "withdrawal of accommodation" with majority of 5:1.
For more details, click here.
RBI Well-Positioned To Take Holistic View Of Economic Issues: Das
RBI well-positioned to take holistic view of issue facing economy, says Governor Shaktikanta Das.
Journey of RBI closely related to evolution of Indian economy
RBI discharged responsibility with integrity, professionalism
RBI was always at the forefront in steering the Indian financial system toward stability
RBI has a much broader range of functions, compared to many other central banks
RBI Monetary Policy Live | Watch Here
Governor Shaktikanta Das to begin his monetary policy statement shortly. Watch the announcement live here.
GDP Growth Expectations Rise After Stellar Q3 Print
World Bank recently estimated India's GDP growth rate for fiscal 2024 at 7.4%.
India economy surprised with a growth rate of 8.4% in the December quarter.
Currency Derivates Norms In Focus
The RBI officials might address concerns over the new norms on exchange-traded currency derivatives today. Traders have been in a tizzy over the new circular which stated that such transactions must have an underlying foreign exchange exposure.
Ease Of Liquidity Conditions
Liquidity conditions have eased in the past few weeks, Bajoria said, adding that the ongoing balance of payment surpluses and pre-election spending likely to keep liquidity conditions in check.
CPI Inflation
India's retail inflation in February remained mostly unchanged from a month ago. The Consumer Price Index-based inflation stood at 5.09% in February, as compared with 5.1% in January.
The food price inflation increased to 8.7% in February, while core inflation—excluding food and fuel—eased to 3.4%. That was the lowest since, at least, 2018.
RBI April Monetary Policy: A Preview
India's Monetary Policy Committee is convening for the first time this fiscal year from April 3 to 5 and is expected to maintain status quo at its seventh straight meeting. Since the committee's last meeting in February, there have been minimal changes, with inflation continuing to indicate easing while economic growth remains robust.
All economists polled by Bloomberg expect the MPC to keep the repo rate unchanged at 6.5%.
Liquidity conditions have eased in the past few weeks, with ongoing balance of payment surpluses and pre-election spending likely to keep liquidity conditions in check, according to Barclays' Chief Economist Rahul Bajoria.
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