RBI Monetary policy highlights: Lending rates unchanged amid Omicron scare

RBI monetary policy LIVE: The Reserve Bank of India's (RBI's) six-member monetary policy committee (MPC), headed by Governor Shaktikanta Das, decided to maintain key interest rates for a ninth straight meeting, retaining an accommodative stance amid the threat surrounding Omicron coronavirus variant.

Repo and reverse repo rates currently stand at 4 per cent and 3.35 per cent, respectively.

The RBI will continue to manage liquidity that is conducive to entrenching the recovery, fostering macro-economic and financial stability, Das reaffirmed. The Reserve Bank has stuck to its liquidity playbook by saying that it will continue to use variable rate reverse repo operations to absorb funds. 14-VRRRs will remain the preferred duration to absorb liquidity although the amount for auction has been raised. The RBI will conduct a VRRR auction of Rs 6.5 trillion on December 17 and Rs 7.5 trillion on December 31.

Growth outlook

Growth Outlook The Indian economy grew 20.1% in the first quarter of the current financial year and 8.4% in the second. With the economy reopening and high-contact services resuming, the output is expected to remain strong in the third quarter. Supply disruptions, higher commodity prices and now concerns caused by the new Covid-19 variant Omicron has, however, added uncertainty to the outlook.

Taking all these factors into consideration, projection for real GDP growth is retained at 9.5% in FY22. Real GDP growth is estimated at 6.6% in Q3 FY22, 6% in Q4 FY22, 17.2% for Q1 FY23 and 7.8% for Q2 FY23.

Inflation outlook

CPI inflation is now projected at 5.3% during FY22. It is seen at 5.1% in Q3, and 5.7% in Q4 of FY22, with risks broadly balanced. It is then expected to ease to 5% and remain there for the first two quarters of the next financial year.

 
Stay tuned for RBI Monetary policy LIVE updates


LIVE UPDATES

Economy facing several headwinds emanating from mostly international factors, says Shaktikanta Das

Economy facing several headwinds emanating from mostly international factors, says Shaktikanta Das in an interaction with the media

RBI Monetary Policy LIVE: Rupee opens

Indian rupee opened 7 paise higher at 75.37 per dollar on against previous close of 75.44 after Reserve Bank of India (RBI) has kept the key rate unchanged and maintained the accommodative stance.

RBI Monetary policy LIVE updates: RBI issuing guidelines for use of alternative reference rate for ECBs

RBI issuing guidelines for use of alternative reference rate for ECBs, in transition away from LIBOR, says Governor Shaktikanta Das

Global monetary policy is reaching an inflection point, keeping financial markets edgy, says RBI governor

India cannot be immune to global spill-overs and spread of new infections.
 
Managing durable, strong, and inclusive recovery is RBI's mission

Propose to launch UPI-based payment products for feature phone users, says RBI governor

To make small-value UPI process flow simpler, via on-device wallet.
 
UPI transaction limit to be hiked to Rs 5 lakh from current limit of Rs 2 lakh
 
UPI transaction limit hike only for retail direct scheme for investment of G-Secs and IPO offering applications

RBI enhances operational flexibility for banks operating their overseas subsidiaries, says RBI governor

Banks need not seek prior approval of RBI to infuse capital in overseas subsidiaries and repatriate the profits, if they meet the regulatory requirements on capital
 
Bank currently need RBI approval to infuse capital in overseas subsidiaries repatriate profits

RBI Monetary policy LIVE: No RBI nod needed for banks to infuse capital in their branches and arms overseas

RBI Monetary policy LIVE: No RBI nod needed for banks to infuse capital in their branches and arms overseas

RBI Monetary policy LIVE updates: RBI will release discussion paper on charges on digital payments in India

RBI will release discussion paper on charges on digital payments in India
 

Propose to enhance 14 day VRRR auction, re-establish it as the main liquidity management operation, says RBI

14-day VRRR auction of Rs 6.5 trillion on December 17, Rs 7.5 trillion on December 31. 
 
From January 2022, liquidity absorption will mainly be managed throguh the auction route

RBI to provide banks with one more option to pre-pay outstanding funds availed through TLTRO 1.0 & 2.0 schemes

To provide banks with one more option to pre-pay outstanding funds availed through TLTRO 1.0 and 2.0 schemes, says RBI governor
 
 
Banks have already pre-paid Rs 37,348 crore in November, constituting about a third of funds availed from TLTRO scheme

RBI Monetary policy LIVE updates: Price pressures may persist in the immediate term, says Guv

Price pressures may persist in the immediate term. Vegetable prices are expected to see a seasonal correction with winter arrivals in view of bright prospects for Rabi crops: RBI Governor Shaktikanta Das

RBI Monetary policy LIVE updates: Headline inflation expected to peak in Q4FY22, soften thereafter

Over the rest of FY22, inflation prints are likely to be somewhat higher as base effects turn higher, says Shaktikanta Das

RBI MPC LIVE: Persistence of CPI inflation excluding food & fuel since June 2020 is an area of concern

The persistence of CPI inflation excluding food & fuel since June 2020 is an area of policy concern in view of input cost pressures that could rapidly be transmitted to retail inflation as demand strengthens: RBI Governor Shaktikanta Das

Market update: Market extend gains post MPC decision

Market update: Market extend gains post MPC decision

RBI's motto is to ensure a soft landing, which is well-timed, says RBI Governor Shaktikanta Das

Price stability remains the cardinal principle of monetary policy, says Shaktikanta Das

RBI Monetary Policy LIVE: Recent tax cuts on petrol/diesel should support consumer purchasing power: Das

RBI Monetary Policy LIVE: Recent tax cuts on petrol/diesel should support consumer purchasing power: Das

RBI Monetary Policy LIVE | We hold strong buffer to manage global spillovers

RBI Monetary Policy LIVE | 'We hold strong buffer to manage global spillovers and inflation is broadly aligned with target. We are better prepared to deal with the invisible enemy - Covid-19. The domestic economic outlook is somewhat clouded by Omicron variant: Governor Shaktikanta Das
 

RBI Monetary policy LIVE updates: 10-year bond yield falls from 6.39% to 6.36%

RBI Monetary policy LIVE updates: 10-year bond yield falls from 6.39% to 6.36%

RBI Monetary Policy LIVE | RBI has revised its Q3FY22 GDP growth to 6.6% from earlier 6.8%

RBI Monetary Policy LIVE | Projection for real GDP growth is maintained at 9.5 per cent. The central bank has however revised its Q3FY22 GDP growth to 6.6 per cent from earlier 6.8 percent: RBI Governor Shaktikanta Das
 

RBI Monetary policy LIVE updates: Govt consumption is picking up from August, says Guv

Recent reductions in excise duty & state VAT on petrol and diesel should support consumption demand by increasing purchasing power. Govt consumption is also picking up from August, providing support to aggregate demand: RBI Governor Shaktikanta Das following MPC meeting

Significant deleveraging of corporate balance sheets, amidst congenial monetary and financial conditions: RBI

Significant deleveraging of corporate balance sheets, amidst congenial monetary and financial conditions: RBI

RBI Monetary policy LIVE updates: CPI inflation projected at 5.3% for 2022

RBI Monetary policy LIVE updates: CPI inflation projected at 5.3% for 2022

RBI Monetary policy LIVE: Recovery of aggregate demand hinges on private investment which is still lagging

Recovery of aggregate demand hinges on private investment which is still lagging, says RBI Governor Das

RBI Monetary policy LIVE updates: MSF rate and bank rate remain unchanged at 4.25%

RBI Monetary policy LIVE updates: MSF rate and bank rate remain unchanged at 4.25%

RBI Monetary policy LIVE updates: Indian consumption increasing, farm economy is robust: Shaktikanta Das

RBI Monetary policy LIVE updates: Indian consumption increasing, farm economy is robust: Shaktikanta Das

RBI Monetary policy LIVE updates: MPC voted unanimously to maintain status quo

MPC voted unanimously to maintain status quo with regard to the policy repo rate and by a majority of 5 to 1 to retain the accommodative policy stance.

RBI Monetary policy LIVE updates: RBI commits to continue with the policy support to growth

RBI Monetary policy LIVE updates: RBI commits to continue with the policy support to growth

RBI Monetary policy LIVE updates: Continues with accommodative stance

RBI Monetary policy LIVE updates: Accommodative stance will continue as long as necessary, says RBI Guv

RBI Monetary policy LIVE: RBI maintains status quo on key lending rates

RBI Monetary policy LIVE: RBI maintains status quo on key lending rates

RBI Monetary policy LIVE updates: RBI keeps repo and reverse repo rates remain unchanged at 4% and 3.35%

RBI keeps repo and reverse repo rates remain unchanged at 4% and 3.35%
 

RBI Monetary policy LIVE updates: We are better prepared to deal with coronavirus, says Shaktikanta Das

RBI Monetary policy LIVE updates: We are better prepared to deal with coronavirus, says Shaktikanta Das

RBI likely to hike reverse repo by 20 bps despite uncertainty on Omicron, writes Kaushik Das

Despite uncertainty related to the Omicron variant’s likely impact going forward, we think sufficient progress has been achieved on the macro front for RBI to hike the reverse repo rate by 20 bps to 3.55 per cent in the December policy, while maintaining the accommodative stance. With a 20 bps hike already being fully priced in, we think RBI should use this opportunity to increase the reverse repo rate, as the action is unlikely to have any meaningful impact for markets. Or, in other words, RBI should not have a problem to take actions which are non-disruptive for markets and already well anticipated by market participants in advance.
 
As long as RBI’s action does not rock the boat and only plays catch up with where market rates already are at the short end, we think the central bank will not have a problem. Currently, the RBI is absorbing about Rs 7.2 trillion liquidity through VRRR at a cut-off rate of 3.98 per cent and another Rs 2.7 trillion through fixed reverse repo at 3.35 per cent. The weighted average rate of such liquidity absorption is about 3.81 per cent, indicating that a 20 bps reverse repo hike to 3.55 per cent will not have any meaningful impact. In fact, if RBI does not do anything, then it will likely come as a surprise for markets. Read on...

RBI Monetary policy LIVE updates: Inflation projections

RBI in October projected CPI inflation at 5.3% for 2021-22

RBI Monetary policy LIVE updates: Omicron seen slowing India’s policy normalisation path

All 28 economists surveyed by Bloomberg expect the MPC to leave the repurchase rate unchanged at 4%

RBI Monetary Policy LIVE: Likely to be 9th consecutive time rates remain unchanged

If the RBI maintains status quo in policy rates on Wednesday, it would be the ninth consecutive time since the rate remains unchanged. The central bank had last revised the policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low. The RBI has been asked by the central government to ensure that the retail inflation based on the Consumer Price Index (CPI) remains at 4 per cent with a margin of 2 per cent on either side. The Reserve Bank had kept the key interest rate unchanged in its after monetary policy review in August citing inflationary concerns.

RBI Monetary policy LIVE: What to watch out for

Key lending rates
 
The committee is likely to keep policy rates unchanged citing uncertainty around growth recovery following the emergence of the Omicron variant. 
 
The market expects the RBI to maintain accommodative policy stance, but expects the policy tone to harden, signalling a change in the monetary policy stance to neutral in the February 2022 policy review.
 
Inflation forecast 
 
The CPI inflation dropped to 4.3% in September from 5.3% in August, before rising mildly to 4.5% in October. That said, the central bank is likely to remain wary of the increases in food prices and persistent increases in various services costs such as telecom tariffs.
 
GDP forecast
 
After holding its growth forecasts during the past two MPC meetings, RBI is likely to acknowledge the strong underlying growth momentum. India’s real GDP expanded 8.4% in year-on-year in Q2FY22, surpassing the MPC’s forecast of 7.9%.
 
 
Liquidity 
 
The central bank has started reducing the liquidity excess in the system through instruments like the variable reverse repo rate or the VRRR. The average rates under recent VRRR auctions have risen to about 3.95%, which is close to the repo rate of 4%.

RBI MPC LIVE updates: Address by Shaktikanta Das to begin shortly

Address by Shaktikanta Das to begin at 10 am

Market update: Sensex soars 650 pts ahead of RBI policy outcome; Nifty atop 17,350

The benchmark indices started firm on Wednesday, ahead of the Reserve Bank of India's monetary policy outcome. The six-member monetary policy committee (MPC), headed by Governor Shaktikanta Das, is likely to maintain key interest rates for a ninth straight meeting, retaining an accommodative stance amid the threat surrounding Omicron coronavirus variant. Read on...

Rupee falls to near two-month low ahead of monetary policy on Omicron fears

The rupee fell to a near two-month low on Monday as equities fell tracking the rise of the Omicron variant of coronavirus in India.
 
The fall in the exchange rate came when the six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI) started its three-day meetings on Monday. The policy will be announced on Wednesday.
 
The partially convertible currency fell to 75.4250 a dollar, down from its previous close of 75.12. This is the lowest since October 12. Read on...

Will Omicron scare force RBI to maintain the status quo on rates? Watch the video

Covid-19 variant Omicron is making the global markets uncertain. So, what will the RBI do on Wednesday? Will it keep its gun powder dry, or will it pull the trigger by hiking rates? Let’s find out  

RBI may keep policy rates steady amid Omicron variant scare

The Reserve Bank of India (RBI) is expected to maintain a status quo on key rates in its bi-monthly policy review to be announced on Wednesday as Omicron, a new strain of Coronavirus, adds to the economic uncertainties.
 
In the last policy review in October, the RBI had kept the key lending rates unchanged for eight consecutive times. The repo rate, at which the RBI lends short-term funds to banks, was kept unchanged at 4 per cent. The reverse repo rate, at which the RBI borrows from banks, was kept unchanged at 3.35 per cent. The Marginal Standing Facility (MSF) rate was also kept unchanged at 4.25 per cent. Read on...

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