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 …….

RBI liable to cut rates for 6th time this year, attempt help development

RBI has conveyed 135 premise focal points rate facilitating this year, yet moneylenders have just transmitted a small amount of that to borrowers.

The Reserve Bank of India is set to convey its 6th straight loan fee cut Thursday, disregarding a spike in swelling as it remains resolutely centered around supporting monetary development. While each of the 34 market analysts reviewed by Bloomberg News as of Wednesday anticipate a decrease, the greater part expect a quarter-point cut, with the rest expecting decreases of 15 premise focuses to 50 premise focuses. The RBI has cut acquiring costs by 135 premise indicates so far in 2019 a nine-year low of 5.15%.

The gathering of the six-part Monetary Policy Committee drove by Governor Shaktikanta Das, who finishes one year in office one week from now, comes in the midst of extending worries about development, budgetary security and feeble open accounts. The strategy choice will be declared at 11:45 a.m. in Mumbai, trailed by a public interview 15 minutes after the fact by Das. Here’s a gander at what else to look out for:

Development direction

The Reserve Bank of India has brought down its development figure for the current monetary year multiple times as of now, with the most recent correction in October pegging extension at 6.1%. Information from that point forward has indicated GDP extension easing back to 4.5% in the July to September period, the weakest pace in over six years.

“With no unavoidable indications of a turnaround, we anticipate that the RBI should cut rates by 25 premise focuses at its December meeting,” said Teresa John, a financial analyst at Nirmal Bang Equities Pvt. in Mumbai. The July-September period saw financial leeway extend, with assembling contracting….

RBI cuts repo rate by 25 bps to 5.75%, changes stance to accommodative

According to a Bloomberg Survey, 31 of 43 economists had projected 25 basis point rate cut while three penciled in a 50 basis points cut.

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) on Thursday reduced the repo rate by 25 basis points (bps) to 5.75 per cent in the second bi-monthly monetary policy meet of the financial year 2019-20 (FY20), that concluded on Thursday. It was a third straight interest rate cut by the RBI. Repo rate is the rate at which the RBI lends money to the commercial banks, in case of any shortfall of funds. Consequently, reverse repo rate now stands at 5.50 per cent. The stance of the policy was also changed to ‘accommodative’ from ‘neutral’.

All members of the MPC (Dr. Chetan Ghate, Dr. Pami Dua, Dr. Ravindra H. Dholakia, Dr. Michael Debabrata Patra, Dr. Viral V. Acharya and Shri Shaktikanta Das) unanimously decided to reduce the policy repo rate and change the stance of monetary policy from neutral to accommodative.

GDP forecast revised downward

The central bank also lowered its growth forecast for the economy for 2019 – 20. Weak global demand due to escalation in trade wars, the RBI feels, may further impact India’s exports and investment activity. The GDP growth projections for 2019-20 was cut to 7 per cent from 7.2 per cent, forecast in the RBI’s meeting in April 2019. “Taking into consideration the above factors and the impact of recent policy rate cuts, GDP growth for 2019-20 is revised downwards from 7.2 per cent in the April policy to 7.0 per cent – in the range of 6.4-6.7 per cent for H1:2019-20 and 7.2-7.5 per cent for H2 – with risks evenly balanced,” the RBI statement said.

Policy in-line with expectation

The RBI was widely expected to go for an interest rate cut amid dismal gross domestic product (GDP) growth, subdued investment and slowdown in consumption space. Last week, government data showed GDP growth slowed to a five-year low of 5.8 per cent in the fourth quarter (Q4) of FY19. According to a Bloomberg Survey, 31 of 43 economists had projected 25 basis point rate cut while three penciled in a 50 basis points cut. Elara Capital, in its report dated June 1, had said weak growth amid benign CPI inflation is expected to create room for the Monetary Policy Committee to cut the repo rate by 50-75 bps through FY20E, beginning in June 2019…

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Do you have an EMI? RBI rate hike to make your borrowings more expensive

The RBI raised interest rates to the highest in 2 years to tackle inflationary pressures

Planning to take a loan? You should not wait any longer. EMIs (equated monthly installments) on home, personal, auto and other loans are set to get costlier as the Reserve Bank of India (RBI) increased the repo rate by 25 basis points to 6.5 per cent from the previous rate of 6.25 per cent.

The RBI has also raised the reverse repo rate by 25 basis points to 6.25 per cent. The decision was taken during the RBI’s Monetary Policy Committee’s (MPC) bi-monthly meeting on Wednesday.

ALSO READ :  RBI monetary policy: Hike as expected; next increase likely in 2019

In its last monetary policy meeting on June 6, the RBI had already increased the repo rate by 25 bps (basis points). Headed by governor Urjit Patel, the central bank raised key policy rates to the highest in two years for the second time in a row in last two months to tackle inflationary pressures.

Over the last two bi-monthly MPC review meetings; there has been a total of 50 bps increase in the repo rate. The second-consecutive increase in repo rate comes as a shocker for those who are already paying EMIS, taken loans from banks or are planning to borrow in future.

ARTICLE SOURCE : BS 

Full text: RBI keeps rates unchanged, cuts inflation projection

RBI keep the policy repo rate unchanged at 6.25%

 

ECONOMY NEWS| The Reserve Bank of India on Wednesday kept its policy repo rate unchanged at 6.25 percent, as widely expected, while lowering its projections for inflation after recent data showed consumer prices rising more slowly. RBI last changed the policy rate with a 25 basis points cut in October.

Here is the full text of the RBI policy

Second 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 on Wednesday, the Monetary Policy Committee (MPC) decided to:

1.  keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25 per cent.

Consequently, the reverse repo rate under the LAF remains at 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.50 per cent.

The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth. 

Assessment

2.  Since the April 2017 meeting of the MPC, globa economic activity has expanded at a modest pace, supported by firming growth in major advanced economies (AEs) and in some emerging market economies (EMEs) as well. In the US, a tightening labour market is generating wage gains. Alongside, industrial production has steadily improved in recent months and retail sales remain robust, although home sales ebbed in April. Political risks remain high, however. In the Euro area, the recovery has been underpinned by consistently falling unemployment, rising retail sales and a brighter outlook for manufacturing reflected in purchasing managers’ and business surveys. In Japan, exports supported by a depreciated yen and industrial activity are driving an acceleration in growth.  | READ MORE