RBI MPC Meet 2024 Updates: RBI MPC decided to keep policy rate unchanged for the seventh time in a row though it remains vigilant towards upside risks to food inflation. The rate increase cycle was paused in April last year after six consecutive rate hikes aggregating to 250 basis points since May 2022.
It is the first bi-monthly monetary policy of 2024-25. A total of six MPC meetings are scheduled for the fiscal year beginning April 1, 2024.
RBI retained inflation projection at 4.5 per cent for the current financial year, lower than 5.4 per cent in the last fiscal.
Assuming a normal monsoon this year, CPI (consumer price index-based) inflation for the current year is projected at 4.5 per cent, with Q1 at 4.9 per cent, Q2 at 3.8 per cent, Q3 at 4.6 per cent, and Q4 at 4.5 per cent.
Reserve Bank Governor Shaktikanta Das also stressed on the need to remain vigilant on food prices, given the forecast of higher temperatures between April-June.
He also said that the impact of reduction in fuel prices on inflation will deepen in the coming months.
Das, however, said the elephant (inflation) seems to have gone for a walk and RBI wants it to remain in the forest.
The central government has tasked the Reserve Bank of India (RBI) to ensure that the Consumer Price Index (CPI) based inflation remains at 4 per cent, with a margin of 2 per cent on either side. The retail inflation was 5.1 per cent in February. March inflation print is scheduled to be released next week.
RBI Monetary Policy 2024 Live Updates: Sakshi Gupta, Principal Economist, Hdfc Bank said, "The policy broadly mirrored the last policy in both its tone and action with no let up in its hawkish tone or any indication of a policy pivot in the coming months." She added, "The likelihood of rate cuts or change in stance are increasingly being pushed forward to the third quarter of FY25. We see cumulative 50 basis points rate cuts in FY25."
01:30:46 PM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Shilan Shah, Deputy Chief Emerging Markets Economist, Capital Economics said, "The RBI kept the repo rate on hold at 6.5% today as expected but the more interesting aspect was the slight dialling down of its hawkish rhetoric. With inflation grinding down towards the central bank's 4% target, we remain comfortable with our view that the RBI will start cutting rates in the third quarter."
Shah added "We think inflation will continue to gradually drop back over the coming months, reaching the 4% target by the middle of the year. As inflation falls, a change in policy stance looks on the cards for the June meeting, which would lay the groundwork for a 25 basis points rate cut in August."
Aurodeep Nandi, India Economist, Nomura, said "A Goldilocks policy meeting for Goldilocks economic conditions. Robust headline growth, capped inflationary pressures, and contained twin deficits on fiscal and current account called for the RBI to keep a steady hand on the policy rudder. It delivered this by maintaining status quo on policy rate, stance and annual forecasts of growth and inflation, along with the hawkish tilt in policy guidance, advising caution on inflation.
However, in our view though, a subtle policy pivot has already occurred. While the stance remains at ‘withdrawal of accommodation’, it has typically been an unreliable guide in the past on future policy action. Typically, a divided MPC and more proactivity on liquidity (vs previous stealth tightening) are the first steps in the choreography of an eventual policy easing cycle."
Dharmakirti Joshi, Chief Economist, CRISIL said, "As expected, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) kept the repo rate unchanged at 6.50%. It has been 14 months since the rate was last raised. That said, over the last one year, the central bank did tighten monetary conditions by reducing liquidity.""With inflation trends mixed, the MPC is preferring to wait for clearer signs of easing towards its 4% target. Strong growth momentum in the economy has provided it space to do so."
12:46:50 PM IST, 05 April 2024RBI to release framework on FinTech Self-Regulatory Organization by this month-end, said Governor Shaktikanta Das.
12:45:10 PM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: We have had 2.2 crore CBDC transactions till now by 46 lakh users and 4 lakh merchants, said RBI Deputy Governor T Rabi Sankar.
12:41:12 PM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Deputy Governor Rajeswar Rao said that having the tag of Small Finance Bank is part of the differentiation. He added that RBI sees no need to review the necessity of the 'small finance bank' tag.
12:37:37 PM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Das said that he cannot give forward guidance on future rate action. Our policy is primarily guided by domestic conditions, he said. He added, "We do not follow the footsteps of the U.S. Fed"
12:28:57 PM IST, 05 April 2024- RBI Deputy Governor Michael Patra
12:27:18 PM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Michael Patra clarified that the rules state that exchange traded currency derivatives are only for hedging purposes, said Michael Patra. "Moot point is that underlying exposure is mandatory for exchange traded currency derivatives, he said.
12:21:56 PM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Food inflation has been highly volatile. The proteins have been keeping the prices high, said Dy Guv Michael Patra. He added, "we will watch it closely so that it does not spill over".
12:17:55 PM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Vegetable prices have to be watched, said RBI Guv. Das said that he has not said heatwaves, but rather higher temperatures.
12:15:50 PM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: The last mile of disinflation is always sticky. We want to align with our inflation target on a durable basis, said Das referring to his on the elephant comment on CPI.
12:06:26 PM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Kunal Kundu, India Economist, Societe Generale said, "With this decision, the June rate cut is definitely off the table and there is a possibility of rate cut being pushed eventually to the third quarter and possibly fourth quarter." He added, although inflation is clearly easing, RBI does not see its trajectory suggesting a move toward its median target of 4.0% on a durable basis. With food inflation being the prime driver of headline inflation while core inflation is at its pandemic low and well below RBI's median inflation target, we feel that the hawkish monetary policy stance will potentially cost growth.
Devendra Kumar Pant, Chief Economist, India Ratings and Research, said "We expect monetary easing either through rate cut or change in stance to begin from October 2024. The strong growth momentum may limit rate cut in easing cycle to 50 to 75 basis points."
11:38:38 AM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Lakshmi Iyer, CEO-Investment & Strategy, Kotak Alternate Asset Managers Limited said, “RBI MPC voted 5-1 for status quo on rates and stance. The key focus of the policy is to be actively disinflationary. This is understandable given the ~15% rise in crude oil prices since Feb 2024. While India seems to be a relative oasis in the desert from a macro stand point, it may be too pre mature for India to relent on rate cuts ahead of US Fed for now. Growth projections are modest and seem achievable, headline inflation too at 4.5% (RBI target is 4%) for FY 25 is broadly in line with our expectations. The market wait for rate cut may need to elongate. FPIs may continue to buy India government bonds ahead of the impending index inclusion, which could offer anchor to bond yields.”
11:17:29 AM IST, 05 April 2024Anu Aggarwal, President & Head Corporate Banking, Kotak Mahindra Bank said, "The monetary policy stance announced today reflects that the RBI is evenly balancing the two divergent objectives of growth and inflation. It seems a case of full commitment to growth with even higher commitment to inflation targets. I hope we will see sustained growth and softened inflation."
11:15:53 AM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: The liquidity situation improved in March with system liquidity turning intermittently surplus in the first half of the month. The RBI conducted fourteen fine-tuning variable rate reverse repo (VRRR) operations during February and early March to absorb intermittent surplus liquidity.
11:09:55 AM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank said, " The MPC on expected lines maintained status quo on rates and stance. While low core inflation provides comfort, the uncertainty on food inflation remains a worry. Further, the higher US yields, higher oil prices and other commodities along with possible delay in Fed’s rate easing cycle will keep the MPC wary. Accordingly, we do not see much scope for any rate easing until Q2FY25. Earliest possibility of rate easing can emerge in Q3FY25."
11:06:55 AM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Deflation in fuel is likely to deepen in the near term, following the cut in LPG prices in March.23 Notwithstanding the cut in petrol and diesel prices in mid-March,24 the recent uptick in crude oil prices needs to be closely monitored.
11:02:31 AM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Now wallet holders no longer have to depend upon the PPI wallet issuer in order to make UPI payments, rather individuals can use any third-party app to transact using UPI.
10:54:01 AM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Shashanka Bhide, Ashima Goyal, Rajiv Ranjan, Michael Debabrata Patra, and Shaktikanta Das voted to keep the policy repo rate unchanged at 6.50 per cent. Jayanth R. Varma voted to reduce the policy repo rate by 25 basis points and also voted for a change in stance to neutral.
10:51:59 AM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: RBI to soon notify scheme for trading on sovereign green bond at International Financial Services Centre, announced RBI Guv during MPC meeting.
10:44:20 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: RBI left the key policy rate unchanged at 6.5 per cent in its monetary policy review for the seventh consecutive time, with the aim of keeping inflation in check.
RBI MPC Meet 2024 Live Updates: RBI proposes to allow cash deposits through UPI, says Guv Shaktikanta Das.
10:34:52 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: RBI to launch a mobile app to facilitate retail participation in govt securities market, announced RBI Guv.
10:33:47 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: India’s forex reserves at $645.6 billion as of March 29. RBI Guv Shaktikanta Das said that It is our prime focus to build up a strong buffer in form of forex reserves.
10:30:24 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: RBI Guv Shaktikanta Das said that the Indian rupee remained largely rangebound. He added that it remained the most stable among major currencies. Compared to previous three years, rupee exhibited lowest volatility in FY24, Das said.
10:26:18 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: CPI was the elephant in the room. The elephant has now gone out for a walk and appears to be returning to the forest, said RBI Guv Das.
10:18:18 AM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: While commenting on high public debt, RBI Guv said such debt is a dormant risk that could erupt.
10:11:57 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: The global economy has remained resilient with a stable outlook, said Shaktikanta Das Governor of the Reserve Bank of India.
10:08:30 AM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: Core inflation has declined steadily over the past 9 months to its lowest level in the series, said RBI Guv. He added that food inflation favours accentuated in February.
10:04:15 AM IST, 05 April 2024RBI Monetary Policy 2024 Live Updates: The MPC also decided to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.
10:02:26 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: During this journey RBI was always at the forefront, steering the economy towards stability, said Das.
10:01:54 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: In recent months, RBI Governor Shaktikanta Das has consistently emphasised the central bank's dedication to reducing inflation to the targeted 4%, rather than merely staying within the tolerance band. Despite ongoing volatility in food inflation throughout February, exerting upward pressure on the headline consumer price index, core inflation, excluding food and fuel, has demonstrated a downward trend.
09:58:14 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: In the event of no changes in interest rates, traders will closely monitor the central bank's stance on market liquidity. The Reserve Bank of India (RBI) has demonstrated increased agility in managing liquidity, adjusting it as necessary to maintain alignment between the weighted average call rate and the policy repurchase rate.
09:55:12 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: India's bond market has experienced a surge in foreign investments, driven by anticipation of inclusion in global bond indexes and lower-than-anticipated government issuance. Consequently, the yield on the benchmark 10-year bond has decreased by approximately 5 basis points this year, contrasting with the upward trend of about 50 basis points observed in equivalent-duration US yields.
09:53:15 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: Since June 2022, the Reserve Bank of India (RBI) has consistently adhered to its hawkish stance, emphasizing the necessity for withdrawing accommodation. Certain economists at Bloomberg suggest that there could be a potential shift towards a neutral stance by the RBI, considering the easing of core inflation, subdued consumer spending in certain sectors, and the government's efforts to control its fiscal deficit.
09:44:28 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: The voting behavior of the six Monetary Policy Committee (MPC) members will also be under scrutiny. In the February meeting, Jayanth Varma, an external committee member, stood alone in advocating for a rate cut. Should other members align with his stance this week or express support for a shift in the policy stance, it could indicate the Reserve Bank of India's readiness to consider implementing rate cuts.
09:32:48 AM IST, 05 April 2024RBI MPC Meet 2024 Live Updates: In February, the consumer price index saw a significant increase of 5.09% compared to the previous year, surpassing the RBI's target mainly due to elevated food prices. However, the core measure, which excludes volatile food and fuel expenses, experienced a decline, suggesting minimal demand-driven inflation within the economy.
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