RBI Press Conference: Governor Shaktikanta Das Stands Ready To Act, Doesn’t Rule Out Rate Cut To Tackle Covid-19 Impact
Catch all updates from the RBI Governor’s press conference live here.
KEY HIGHLIGHTS
Watch: RBI Governor Doesn't Rule Out Rate Cut, Stands Ready To Take Action
RBI Governor Shaktikanta Das today said he is not “ruling out” the possibility of a rate cut. However, that will be discussed in the bi-monthly monetary policy committee meeting as mandated by the law.
We will use the various policy instruments from time to time depending on the requirement. Our response will be calibrated. Our effort is to see that our responses are neither premature nor delayed.RBI Governor Shaktikanta Das
Das also said that after the favourable response to the RBI's $2 billion forex swap auction, the central bank will conduct another dollar-rupee sell swap.
The RBI will also conduct further long term repo operations of up to Rs 1 lakh crore in multiple tranches.
Other Highlights:
- Important that policy space is used properly and is suitably timed to optimise impact.
- Will take a clearer view of global slowdown at MPC meeting.
- India not immune to impact from Covid-19 pandemic.
- RBI's reconstruction plan for Yes Bank is “credible and sustainable”.
- The RBI will provide any additional liquidity if required for Yes Bank.
Watch the full press conference and what market experts made of the RBI’s decisions.
What Experts Made Of RBI's Press Conference
Arvind Chari, Head Of Fixed Income, Quantum Advisors
- RBI still prioritising liquidity action, over rate action.
- Right now, RBI looks more worried about rupee depreciation.
- Expect rate action to follow.
- Another set of LTROs significant considering current liquidity situation.
- Any liquidity measure isn't going to drive credit demand; but will be good for bond markets.
- Much of the yield fall today was also due to the Fed action; market expected RBI to follow suit.
- Have seen foreign outflows over the last 1.5 weeks; but the rupee is still overvalued on a real effective exchange rate basis.
Abheek Barua, Chief Economist, HDFC Bank
- If central bank calls a press conference in the middle of the worst financial crisis since 2008, you expect something more substantial.
- Whether central bank action will make an immediate difference or not, is a different question.
- Expected something more substantial, like a rate cut or regulatory forbearance for sectors already affected.
- These are extraordinary times, RBI should have used the platform to make some significant announcement.
- Disappointed that nothing substantial was announced, but glad that the governor assured that nothing is off the table.
Rahul Bajoria, Chief Economist, Barclays Investment Bank
- Today's announcements effectively close the door on an inter-meeting move.
- Rate cut remains very much on the table; but likely to be taken by MPC rather than through emergency meetings.
- Demand for LTROs might be weaker if the market is expecting another rate cut.
India Bonds Pare Gains As Traders Left Wanting More
India’s 10-year sovereign bond pared gains after the RBI Governor's press conference.
Bonds had rallied earlier in the day amid growing expectation that the RBI could announce an emergency rate cut to tackle the impact of the coronavirus outbreak. Traders were hoping that the RBI will follow other global central banks with some coordinated policy action.
Another Forex Swap, More LTROs
RBI Governor Shaktikanta Das said that after the favourable response to its $2 billion forex swap auction, the central bank will conduct another dollar-rupee sell swap. Details of this will be notified separately. The auction will be conducted on March 23.
The RBI will also conduct further long term repo operations of up to Rs 1 lakh crore in multiple tranches.
RBI Ready To Act
The RBI Governor Shaktikanta Das said that the central bank has a wide variety of instruments and is ready to use them whenever needed.
“It is important that policy space is used properly and is suitably timed to optimise impact. RBI has several policy instruments at its command and stands ready to take all necessary measures to ensure that the effects of Covid-19 pandemic on India are mitigated.” - RBI Governor Shaktikanta Das
Das said that the central bank will take a clearer view of the global slowdown at the monetary policy committee meeting. He added that domestic liquidity continues to be stable.
'Covid-19 Could Have Economic Impact On India'
India is not immune to the coronavirus outbreak and a synchronized slowdown in global trade could have an effect on the Indian economy too, the RBI Governor said. “Covid-19 pandemic is disrupting the economy in a wide swathe of affected countries.”
- Financial conditions have tightened worldwide as a result of Covid-19 pandemic.
- Tentative estimates of loss of global growth placed at 0.4-1.5 percent.
