RBI may ‘kill excess demand’ in economy in six-eight months

 The RBI increased the limit for keeping specified securities in the HTM portfolio from 22 per cent to 23 per cent

With inflation remaining at elevated levels, central banks around the world, including the Reserve Bank of India (RBI), will kill excess demand in economy over the next six to eight months, sources in the know said. They also indicated that there could be a rate hike in June, when the inflation forecast for the current financial year would be raised. The RBI, the sources said, might announce more steps such as raising the limit on held-to-maturity (HTM) bonds to support government borrowings but might not come out with any further quantitative easing GSAP (Government Securities …….

More scope to cut interest rates, says RBI Governor Shaktikanta Das

Das said he hoped a recent trade deal between the United States and China would hold and not be reversed

There is scope for cutting interest rates further and the central bank will use it when required after studying the growth and inflation data, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Monday. The monetary policy committee (MPC) surprised markets and analysts this month by holding rates steady after trimming the key interest rate by 135 basis points since the beginning of the current rate reduction cycle in February.

“While taking a pause we, very carefully and very definitely, said there is space for further monetary policy action, but the timing will have to be decided in a manner that its impact is optimum and its impact is maximised,” Das said at a conclave organised by the Times media group. Das said the markets were surprised when the committee started cutting rates in February but subsequently accepted that it was right in doing so. “And this time, the pause we have taken, I do hope that events will unfold in a manner which will prove that the MPC decision is right,” Shaktikanta Das said.

He said both the government and the central bank had taken steps to help the economy recover but the outcome of events in the global economy would play a role. Das said he hoped a recent trade deal between the United States and China would hold and not be reversed. The “Phase one” agreement reduces some US tariffs in exchange for a big jump in Chinese purchases. “What is important in the current context is coordinated and timely action by all the advanced and emerging economies to revive growth,” he said.

“Growth is an issue of discussion in India and global growth is also an issue of discussion because that does impact. For a moment, I am not implying that the slowdown that we have seen in India is entirely due to global factors, but it does impact growth prospects for India.”

Monetary policy review: RBI set to cut rate. Question is by how much?

The policy decision will be announced at 11:45 a.m. in Mumbai, followed by a press conference 15 minutes later by Das

The Reserve Bank of India is set to deliver a fifth straight interest rate cut Friday, although economists are unsure of the quantum following an unconventional 35 basis-point easing last time.

While all 39 economists surveyed by Bloomberg News expect a reduction, their forecasts range from 15 basis points to 40 basis points. The RBI has lowered borrowing costs to a nine-year low of 5.4% through 110 basis points of easing so far in 2019.

The meeting of the six-member RBI Monetary Policy Committee led by Governor Shaktikanta Das comes amid growing concerns about India’s banking and financial sector, and just weeks after Prime Minister Narendra Modi eased fiscal levers by announcing a surprise $20 billion tax break for companies.

The policy decision will be announced at 11:45 a.m. in Mumbai, followed by a press conference 15 minutes later by Das.

Here’s a look at what else to watch out for:

Growth: The RBI has lowered its growth forecast for the current fiscal year three times already, with the latest revision in August pegging growth at 6.9%. Data since has shown gross domestic product expansion slowing to 5% in the June quarter, the weakest pace in six years. That may prompt the central bank to revisit the numbers once again.

The latest growth numbers “look much worse,” Das said recently, referring to RBI’s projection of 5.8% expansion in the April-June period. “There is a slowdown, which was evident and at the last MPC we very clearly said that growth seems to be losing traction and therefore, growth is a matter of highest priority.”

RBI junks digital transaction charges, sets up panel on ATM interchange

RTGS, meant for large-value instantaneous fund transfers, and NEFT, for other fund transfers, are operated by the central bank

The Reserve Bank of India (RBI) in its monetary policy meeting on Thursday announced the waiver of certain digital transaction fees and set up a committee to review the long-disputed automated teller machine (ATM) interchange.

Waiver of NEFT, RTGS charges

In order to accelerate digital payments in the country, the RBI decided to remove the charges it levied on transactions done under Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).

“Banks will be required, in turn, to pass these benefits to their customers. Instructions to banks in this regard will be issued within a week,” said the RBI in its Statement on Developmental and Regulatory Policies on Thursday. RTGS, meant for large-value instantaneous fund transfers, and NEFT, for other fund transfers, are operated by the central bank. The RBI levied minimum charges, which the banks would pass on their customers…

Panel formed to review ATM interchange fee structure

The RBI decided to set up a committee involving all stakeholders, under the chairmanship of the chief executive officer of the Indian Banks’ Association (IBA), to examine the entire gamut of ATM charges and fees. The committee is expected to submit its recommendations within two months of its first meeting. The composition and terms of reference of the committee will be issued within a week. “Usage of Automated Teller Machines (ATMs) by the public has been growing significantly. There have, however, been persistent demands to change the ATM charges and fees,” it said…

Click Here: Digital Transaction charges

Demonetisation's failure won't hurt PM Modi, he's already changed the narrative

Modi has learnt never to engage with his opponents and a hapless Opposition is trying to keep up

 

economy news:APCO Worldwide, a transnational public relations company, had their most apt pupil in then Gujarat chief minister Narendra Modi. The one thing Modi learnt was never to engage with his opponents on issues they want to talk about. He sets the agenda and a hapless opposition and media try to keep up. Demonetisation was a Modi-made disaster. Yet the disaster only served to propel Modi to greater electoral heights, and today, as he towers over a clueless opposition, even the return of 99% of the extinguished notes does not change the narrative of one man’s fight against corruption.

Modi had made an emotional pitch on demonetisation – “Give me 50 days, then punish me if I am wrong” – which was the lead story in all newspapers. Today who remembers that? Modi has moved on from “acche din” to “new India” and, like the Pied Piper, carried a mesmerised UP electorate with him. He swept the UP assembly, anointed Adityanath as chief minister and could not care less about what the opposition and media will now say.

ALSO READ: GDP growth hits 3-year low of 5.7%, slowest under Modi govt

Former Prime Minister Manmohan Singh had called demonetisation “an organised loot and legalised plunder”, and the venerable economist had a point. Modi, however, used demonetisation as a chance to reinvent himself as a “messiah of the poor”. The only jibe that struck home was Rahul Gandhi’s comment of a “suit boot ki sarkar” after Modi aired his Holland and Sherry Rs 10 lakh suit (with his name pinstriped on it) in his meeting with former US President Barack Obama.

The suit was auctioned off; the godmen and friends of the BJP are still present and in action; yet, with the demonetisation gamble, Modi achieved his aim.

ALSO READ: 99% of banned notes returned after demonetisation: RBI annual report

Modi and his closest aide, Amit Shah, are a ruthless-election winning combine. They give no quarter and expect none. No niceties of politics are maintained and the BJP has been transformed into a formidable election-fighting machine, modelled from the booth level upwards on the Congress of the 1950s. Modi himself is on 24/7 campaign mode. Consider this: until the Gujarat election later this year, he will make weekly trips to the state.

A senior member of the cabinet told me, “We are quiet in cabinet but occasionally the prime minister scoffs at the media. The opposition is never discussed as they have become irrelevant”.(READ FULL STORY)

Full text of RBI policy: Repo rate cut by 25 bps to 6%

The MPC noted that inflation excluding food and fuel has fallen significantly over the past 3 months

economy news : The Reserve Bank of India on Wednesday cut its main policy rate by a quarter percentage point to a more than 6-1/2 year low after inflation slumped.

RBI cut its repo rate by 25 basis points to 6.00 per cent - the lowest since November 2010 - as a slump in food prices sent June consumer inflation to a more than five-year low of 1.54 per cent.

The MPC noted that some of the upside risks to inflation have either reduced or not materialised:

(i) the baseline path of headline inflation excluding the HRA impact has fallen below the projection made in June to a little above 4 per cent by Q4

(ii) inflation excluding food and fuel has fallen significantly over the past three months

(iii) the roll-out of the GST has been smooth and the monsoon normal. Consequently, some space has opened up for monetary policy accommodation, given the dynamics of the output gap. Accordingly, the MPC decided to reduce the policy repo rate by 25 basis points

Here is the full of text of 'Third Bi-monthly Monetary Policy Statement, 2017-18 Resolution of the Monetary Policy Committee (MPC) Reserve Bank of India':

On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to:

•reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.25 per cent to 6.0 per cent with immediate effect.

Consequently, the reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25 per cent......Read full article