RBI MPC LIVE: Original aim of Rs 2000 note withdrawal largely met, says Das

RBI policy: In the last bi-monthly announcement in August, the MPC decided to keep the benchmark repo rate unchanged at 6.5% for the third time in a row. Check all LIVE updates for today's MPC here

12:49 PM

Change of stance only when inflation stays down on a durable basis: Das

"Change of stance to neutral when we see inflation at 4 per cent on a durable basis," said RBI Guv Das. In Friday's announcement, RBI MPC has decided to continue with the stance of withdrawal of accommodation. 

12:46 PM

Expect RBI to start rate-cutting from 2nd quarter of next financial year: CareEdge Ratings' Rajani Sinha

Rajani Sinha, chief economist, CareEdge Ratings on RBI MPC announcement:

 

"The monetary policy committee's decision to maintain the current policy rate and stance was on expected lines. Overall, the policy had a hawkish undertone to it. The governor sounded cautious about inflation even though the full-year inflation projection was unchanged. It is to be noted that the governor reiterated the RBI's commitment to bring CPI inflation down to 4 per cent target. The RBI kept the GDP growth projection for FY24 untouched as they await additional data points to comprehensively assess the evolving dynamics.

 

Furthermore, the RBI remains watchful of the liquidity conditions and wants to ensure no build-up of surplus liquidity. Hence the governor announced that RBI would consider open market operation (OMO) sale of government securities to mop up excess liquidity as required. We expect the RBI to start its rate-cutting journey from the second quarter of next financial year as inflation edges closer to 4 per cent target." 

12:42 PM

Original objective of withdrawal of Rs 2,000 notes largely met: RBI Guv Das

"Original objective of withdrawal of Rs 2,000 notes largely met," says RBI Guv Das. Indians have till tomorrow to exchange these bank notes with commercial banks. After that, they will have to submit the notes with the RBI. 

12:37 PM

OMOs will be done via auction: Das

OMOs will be done via auction and duly notified; it's only for domestic liquidity management: RBI Guv Das

12:33 PM

OMO sales is important even from a longer perspective: YES Bank's Indranil Pan

Indranil Pan, chief economist, YES Bank on RBI MPC announcement: 

 

"This policy was on expected lines with no change in the policy rate as also the stance. Even as food inflation and core inflation had been moderating, the RBI rightly desisted from providing any dovish bent to the policy communication. On the other hand, the future guidance was laced with adequate cautionary notes on the inflation trajectory and the risks to the same coming from uncertainties over the kharif output, lower reservoir levels and volatile global crude and commodity prices. And there is a clear reverberation of the previous policy – that the RBI will only be happy if they are able to hit the 4 per cent-mark on inflation on a durable basis. And, for now, this seems to be eluding as the RBI themselves have forecasted inflation for the year at 5.4 per cent, with even the Q1 of the next financial year being higher at 5.2 per cent. Given that excess liquidity could be inflationary and can pose risks to financial stability, the RBI has started deploying policy tools from the August policy to remove the excess liquidity from the system. Unexpected by all, the RBI announces that OMO sales also becomes a policy tool for the future in its efforts to suck out liquidity. This is important even from a longer perspective, given that India could be expecting large FX flows in FY25 on the back of JPM bond index inclusion."

12:22 PM

Inclusion of African Union in G20 welcome: Das

"Inclusion of African Union in G20 is a very welcome step, now financial sector issues relating to Africa will be discussed at the forum," says RBI Guv Das.

12:12 PM

Liquidity in surplus in Indian economy: Shaktikanta Das

Liquidity in surplus, we will be very watchful about its active management, says governor Das

12:09 PM

No calender for open market operations yet: RBI governor Das

Open market operations will be undertaken on the basis of macroeconomic conditions, no calender fixed yet; not related to global bond index inclusion: Shaktikanta Das at the press conference in Mumbai. 

12:05 PM

Expect next policy move to be a rate cut in Q1FY25: ICICI Securities' Prasenjit Basu

Prasenjit Basu, chief economist, ICICI Securities on RBI MPC announcement:

 

"Unsurprisingly, the RBI’s MPC decided to keep its policy rate unchanged at 6.5 per cent and retained its stance of 'withdrawal of accommodation'. The key change is a much more benign inflation forecast, suggesting that the RBI expects CPI inflation to abate to well below 6 per cent YoY in Sep’23, and to stay at 5.6 per cent YoY in Oct-Dec’23 and 5.2 per cent YoY in Jan-Mar’24. We continue to expect the next policy move to be a rate cut in Q1FY25."

11:58 AM

Brace for a long pause on the repo rate: RBL Bank's Achala Jethmalani

Achala Jethmalani, economist at RBL Bank on RBI MPC announcement:

 

"In line with our expectations, the MPC maintained a status-quo on policy rates and stance. We view it as a ‘hawkish hold’ on policy rates as the focus remains on bringing inflation down to the 4 per cent target. The RBI’s comments on existing banking system liquidity is indicative of tighter system liquidity conditions continuing as it stands ready to deploy all its tools to absorb excess system liquidity. Brace for a long pause on the repo rate with tighter liquidity conditions. This is expected to complete the policy transmission in this hiking cycle with the objective of keeping borrowing costs high. The resilience in economic growth despite the restrictive financial conditions underpin the RBI’s move to tighten the liquidity conditions."

11:20 AM

A pragmatic policy announcement for maintaining stability and sustained growth: Jyoti Prakash Gadia

Jyoti Prakash Gadia, Managing Director at Resurgent India on RBI MPC announcement:

 

"On expected lines, the RBI has decided to keep the repo rate and the stance unchanged, with a cautious approach towards inflation which is still showing uncertainties. The global food and energy volatility in prices and monsoon-impacted kharif sowing is expected to continue built-up of pressure on inflation and as a result, RBI has decided to keep a wait-and-watch policy, before taking a further view on repo rate change.

 

The fact that the projected GDP growth rate and inflation rates have been kept unchanged indicates the resolve of RBI to be able to tame inflation with suitable action while supporting growth.

 

The stock market is expected to show positive signs with the likelihood of fresh capital investments both privately and through government expenditure.

 

In the matter of liquidity, RBI has rightly hinted at taking a careful approach, with an intent to maintain balance through open market operations in government securities, which is a tool available in the hands of RBI to immediately inject or suck out liquidity.

 

The emphasis on maintaining stability in the financial markets with efficient risk management by banks and NBFCs is a step in the right direction to ensure long-term sustainable growth.

 

Overall, a pragmatic policy announcement for maintaining stability and aiming at sustainable growth."

11:17 AM

Strategic and balanced approach by RBI: Biz2X's Rohit Arora

Rohit Arora, CEO and co-founder, Biz2Credit and Biz2X on RBI MPC announcement:

 

"RBI's decision to hold the repo rate steady at 6.5 per cent showcases a strategic and balanced approach to India's economic trajectory. For fintech companies like ours, this not only provides a predictable environment but also signals a conducive atmosphere for sustained growth. It's a clear indication that the regulators are in sync with market dynamics, paving the way for Fintechs in India to innovate, expand, and contribute more significantly to the nation's financial inclusivity."

 

11:15 AM

Rate cut only in the first quarter of next financial year: Crisil's Dharmakirti Joshi

Dharmakirti Joshi, chief economist, CRISIL on RBI MPC announcement:

 

"Steady interest rates with no change in stance was widely expected and par for the course.  Despite the second quarter bulge in inflation, the RBI kept its inflation forecast for the current fiscal unchanged at 5.4 per cent.

 

Further, the incomplete transmission of past 250 basis-points rate hikes to bank lending and deposit rates reinforced MPC's imperative to continue its stance of withdrawal of accommodation. Noting resilient economic conditions, the MPC kept its GDP forecast unchanged at 6.5 per cent this fiscal.

 

Food inflation remains a key monitorable not only because it is in double digits, but also because sub-normal monsoon and muted sowing can impact kharif output and prices. Additionally, low reservoir levels do not augur well for the rabi crops.

 

Crude oil has seen a lot of volatility of late and there is a reason to be cautious on that front — more due to geopolitical factors than demand, which is slowing and unlikely to drive crude prices up.

 

Tightening of US bond yields, capital outflows and strengthening dollar also tilt the balance in favour of 'withdrawal of accommodation' stance. We expect rates to remain at these levels and foresee a rate cut only in the first quarter of next fiscal."

10:54 AM

Our inflation target 4%, not 2-6%: Shaktikanta Das

"Our inflation target is 4 per cent, not 2 to 6 per cent; we remain vigilant to evolving inflation target," said RBI governor Shaktikanta Das. 

 

10:20 AM

Real GDP growth for FY4 is projected at 6.5%: Guv Das

Taking all factors into consideration, Real GDP Growth for the current financial year 2023-24 is projected at 6.5%...The risks are evenly balanced. Real GDP Growth for the first quarter of next financial year 2024-25 is projected at 6.6%.