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August 05, 2022 / 02:18 PM IST

RBI Monetary Policy Highlights: A 50 bps rate hike has become ''new normal'' for central banks, says Shaktikanta Das

RBI Monetary Policy Highlights: The central bank raised the repo rate to above pre-pandemic level and the MPC is focused on withdrawal of accommodation.

The rate-setting panel of the Reserve Bank of India (RBI) hiked the key lending rate, the repo rate, by 50 basis points (bps), taking the policy rate back to the late-2019 levels. One bps is one-hundredth of a percentage point.

With the latest hike from the six-member Monetary Policy Committee (MPC), the repo rate now stands at 5.4 per cent. Repo is the rate at which the central bank lends short-term funds to banks. Changes in this rate typically gets transmitted to the broader banking system.
  • August 05, 2022 / 02:09 PM IST

    This LIVE blog session has concluded. For the latest news, views and updates, stay logged-on to Moneycontrol.

  • August 05, 2022 / 01:39 PM IST

    RBI Monetary Policy LIVE | MC Pro: Does monetary policy really work?


    -By targeting aggregate demand across the whole economy, monetary policy may be too blunt an instrument to tackle the ongoing inflationary pressures in the economy, instead adding to the already chronic high unemployment rates in the country 

    Read More Here
     

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  • August 05, 2022 / 01:20 PM IST

    RBI Monetary Policy LIVE | RBI received requests from banks to set up Rupee Vostro accounts: Deputy Governor Rabi Sankar

    -RBI has received requests from banks to set up Rupee Vostro accounts to facilitate international trade in rupees, a deputy governor of the central bank said on August 5.

    -“There have been requests from banks,” Rabi Sankar said in a press briefing after the monetary policy decision.

    -Amid a persistent weakness in the rupee’s exchange rate versus the dollar, the RBI on July 11 announced a mechanism to settle trade transactions in rupee terms.

    -The central bank said that the move was to promote growth of global trade and to support increasing global interest in the rupee.


    Read More Here

  • August 05, 2022 / 01:15 PM IST

    RBI Monetary Policy LIVE | Can't reveal the thinking of RBI on neutral interest rate: Governor Shaktikanta Das

    -The path to the neutral interest rate is a two-part journey: first when inflation falls within the tolerance band and two, when it aligns with the (medium-term) target, said RBI Deputy Governor Michael Patra. RBI Governor Shaktikanta Das said that he can’t reveal thinking of RBI on the neutral interest rate.

     

  • August 05, 2022 / 01:07 PM IST

    RBI Monetary Policy LIVE | Bank stocks in a sweet spot, say experts as RBI grows more hawkish


    -With the Reserve Bank of India (RBI) restoring benchmark policy rates to pre-pandemic levels, bank stocks may emerge as winners and real estate names will likely take a hit, said analysts.


    -Bank stocks have already been rallying for a couple of months thanks to improved financial performance and recovery in economic activities. Meanwhile, real estate stocks have also risen due to record sales in recent quarters.


    -“We have seen system liquidity tighten since the RBI started withdrawing excess liquidity, and system credit growth improved to 14 percent. With credit growth looking up, we believe the banks with a higher share of floating rates and a robust CASA-led deposit franchise should be placed well in this increasing interest rate environment,” said Naveen Kulkarni - Chief Investment Officer, Axis Securities. 

    Read More Here

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  • August 05, 2022 / 12:54 PM IST

    RBI Monetary Policy LIVE | Liquidity normalisation a multi-year process; will spill over next year too: Das


    -Overall liquidity today is fairly high, about Rs 5 lakh-6 lakh crore. Normalising it will be a multi-year process. The process will spill over into next year also, said RBI Governor Shaktikanta Das in the post-policy press conference

  • August 05, 2022 / 12:51 PM IST

    RBI Monetary Policy LIVE | As RBI gives an umbrella for the rupee, bond market left in the downpour
     

    -India’s central bank has chosen to use its sturdy umbrella of forex reserves to keep the exchange rate from complicating its fight for price stability and that means it has to leave the bond market to fend for itself. Understandably, the bond market is feeling snubbed.

    -RBI Governor Shaktikanta Das highlighted all the possible ill effects of elevated levels of inflation in his statement on Friday after the central bank’s six-member rate-setting committee voted unanimously for a 50-basis point hike in the repo rate. One basis point is one-hundredth of a percentage point.

    -. He also said that the rupee has behaved in an orderly way and that forex reserves are a sturdy umbrella against external pressures on the Indian rupee. The rupee has appreciated roughly 0.5 percent so far on Friday. 

    Read More Here

  • August 05, 2022 / 12:44 PM IST

    RBI Monetary Policy LIVE | MPC member Jayanth Varma disagreed with RBI's policy stance, shows statement


    -Jayanth R Varma, one of the six members of monetary policy committee (MPC), expressed reservations on the continuation of withdrawal of accommodative stance, showed the policy document.


    -Five members of the panel, Shashanka Bhide, Ashima Goyal, Rajiv Ranjan, Michael Debabrata Patra and Shaktikanta Das, voted to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.


    -However, Varma expressed reservations on this part of the resolution, the statement showed. Read More Here

  • August 05, 2022 / 12:38 PM IST

    RBI Monetary Policy LIVE | Can’t assess CAD for FY23 on one month’s merchandise trade: Michael Patra


    - We can’t assess the current account deficit for FY23 as a whole on the basis of one month’s merchandise trade data, said RBI Deputy Governor Michael Patra at the post-policy press conference

    -We see FY23 current account deficit at sustainable levels. But I would not like to divulge the exact number we expect for current account deficit, said RBI Governor Shaktikanta Das

  • August 05, 2022 / 12:34 PM IST

    RBI Monetary Policy LIVE | Our monetary policy actions have not fueled domestic inflation: RBI Governor


    -So far as current inflation is concerned, I don’t think demand is a factor. It’s primarily due to supply issues and imported inflation. Our monetary policy actions have not fueled domestic inflation, said Governor Das


    - I can’t say at what inflation level the MPC will pause on interest rates as the situation is dynamic and very uncertain, he added in the post-policy press conference.

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  • August 05, 2022 / 12:29 PM IST

    RBI Monetary Policy LIVE | CPI inflation has peaked, now at “unacceptably high levels”: RBI Governor


    -Resilient economic activity gives RBI space to act to contain inflation, said RBI Governor Shaktikanta Das in a post-policy press conference.

    -Current account deficit is expected to remain within manageable limits. We have the ability to finance the current account deficit. Forex reserves remain strong and we will deal with excess volatility in the exchange rate.

    -MPC targets inflation while keeping in mind the objective of growth. The rupee's exchange rate is an indirect determinant of policy through its effect on inflation. But the level of exchange rate itself is not a factor for the MPC to deliberate, he added.

  • August 05, 2022 / 12:20 PM IST

    RBI Monetary Policy LIVE | A 50 bps rate hike has become new normal for central banks: RBI Governor


    -A 50 bps rate hike has become new normal among global central banks, said Governor Das in the post-policy press conference

    -Most likely scenario is banks will pass on impact of repo rate hike to deposit rates. This is already happening and the trend will continue, he added.

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