RBI monetary policy LIVE: RBI keeps repo rate at 6%, flags inflation risks

RBI sees pick in credit growth due to bank recapitalisation and resolution proceedings under IBC

4:11 PM

RBI said that recapitalisation of public sector banks along with resolution of stressed assets under the Insolvency and Bankruptcy Code (IBC) will create demand for fresh investments.

 

"GVA (Gross Value Added) growth for 2017-18 is projected at 6.6 per cent," it said.

4:01 PM

Viral Acharya, deputy RBI Governor

The objective of the liquidity operations conducted by the Reserve Bank of India (RBI) are not to manage the price of bonds, but to drive its monetary policy goals, Deputy Governor Viral Acharya, said on Wednesday after the central bank's monetary policy meeting, damping expectations of bond purchases by the central bank.

3:59 PM

Highlights of RBI policy: Q4FY18 inflation projection raised to 5.1%

Following are the highlights of the RBI's 6th bi-monthly monetary policy statement:

* Key lending rate (repo) unchanged at 6%

* Reverse repo rate remains at 5.75% and marginal standing facility (MSF) rate and Bank Rate at 6.25%

* Monetary policy's stance neutral

* Petrol and diesel prices rose sharply in Jan, reflecting lagged pass-through of past increases in global crude prices

* Retail inflation estimated at 5.1% in Q4 this fiscal and 5.1-5.6% in H1 of FY2018-19

3:53 PM

There are five taxes on capital which will have an impact

 

There are five taxes on capital which will have an impact on investments: RBI Governor Urjit Patel.

3:52 PM

"The focus of the Union Budget on the rural and infrastructure sectors is a welcome development as it would support rural incomes and investment, and in turn provide a further push to aggregate demand and economic activity," it said.

3:52 PM

RBI lowers economic forecast to 6.6% for FY18

RBI lowered the economic growth projection for 2017-18 to 6.6 per cent, but said that it will accelerate to 7.2 per cent in the next financial year as the roll-out of GST stabilises and credit offtake improves.

3:50 PM

Sensex ends lower, Nifty below 10,500 as RBI keeps repo rate unchanged

Benchmark indices ended lower on Wednesday after Reserve Bank of India kept the key policy rate unchanged at 6 per cent for the third consecutive time in view of firming inflation. Reverse Repo rate was also maintained at 5.75%.

3:37 PM

Following are key highlights of the RBI's 6th bi-monthly monetary policy statement

 

* Key lending rate (repo) unchanged at 6 pc;

 

* Reverse repo rate remains at 5.75 pc and marginal standing facility (MSF) rate and Bank Rate at 6.25 pc;

 

* Monetary policy's stance neutral;

 

* Petrol and diesel prices rose sharply in Jan, reflecting lagged pass-through of past increases in global crude prices;

 

* Retail inflation estimated at 5.1 pc in Q4 this fiscal and 5.1-5.6 pc in H1 of FY2018-19;

 

* Inflation likely to ease to 4.5-4.6 per cent in H2 of FY19;

 

* Gross Value Added (GVA) growth for FY18 seen at 6.6 percent;

 

* GVA growth for 2018-19 projected at 7.2 percent;

 

* GST stabilising, which augurs well for economic activity;

 

* Early signs of revival in investment activity;

 

* RBI seeks pick-up in credit growth due to recapitalisation of PSBs and resolution proceedings under IBC

 

* Export growth expected to improve further on account of improving global demand;

 

* RBI says focus of Union Budget on rural and infrastructure sectors a welcome development;

 

* Five members voted in favour of status quo in interest rate; one member voted for increase of 0.25 pc;

 

* Next meeting of the MPC on April 4 and 5.

3:34 PM

Even though the current account deficit narrowed sharply in Q2 of 2017-18 on a sequential basis, it was higher than its level a year ago, mainly due to widening of the trade deficit, says MPC.

3:34 PM

Sensex falls 100 pts as RBI sounds hawkish.

3:34 PM

With a view to promote a less cash economy, the incentive schemes have been reviewed by RBI and it has been decided to discontinue going forward the incentives for installation of Cash Recycler Machines (CRMs) and Automated Teller Machines (ATMs).

3:33 PM

Since MCLR is more sensitive to policy rate signals, it has been decided to harmonize the methodology of determining benchmark rates by linking the Base Rate to the MCLR with effect from April 1, 2018. RBI says necessary instructions to be issued by end of next week.

3:31 PM

The next meeting of the MPC is scheduled on April 4 and 5, 2018.

3:31 PM

The minutes of the MPC’s meeting will be published by February 21, 2018.

3:31 PM

Chetan Ghate, Pami Dua, Ravindra H Dholakia, Viral V Acharya and Urjit R Patel voted in favour of the monetary policy decision. Michael Debabrata Patra voted for an increase in the policy rate of 25 basis points.

3:29 PM

Having a fiscal stance conducive to achieving 4% CPI target is desirable. Shifting away from stated fiscal path is not conducive to our objectives, says RBI Governor Urjit Patel

3:28 PM

Key takeaways

 

— Repo rate unchanged

 

— Inflation forecast raised

 

— Inflation Outlook: CPI inflation for 2018-19 is estimated in the range of 5.1-5.6 percent in H1, including diminishing statistical HRA impact of central government employees, and 4.5-4.6 percent in H2, with risks tilted to the upside.

3:25 PM

RBI monetary policy committee

 

The MPC notes that the inflation outlook is clouded by several uncertainties on the upside.

3:23 PM

OUTLOOK

 

RBI monetary policy committee

 

Taking into consideration the above factors, GVA growth for 2018-19 is projected at 7.2 per cent overall – in the range of 7.3-7.4 per cent in H1 and 7.1-7.2 per cent in H2 – with risks evenly balanced.

3:22 PM

OUTLOOK

 

RBI monetary policy committee

 

Turning to the growth outlook, GVA growth for 2017-18 is projected at 6.6 per cent. Beyond the current year, the growth outlook will be influenced by several factors.

 

1.  GST implementation is stabilising, which augurs well for economic activity.

 

2. There are early signs of revival in investment activity as reflected in improving credit offtake, large resource mobilisation from the primary capital market, and improving capital goods production and imports.

 

3. The process of recapitalisation of public sector banks has got underway. Large distressed borrowers are being referenced for resolution under the Insolvency and Bankruptcy Code (IBC). This should improve credit flows further and create demand for fresh investment.

 

4. Although export growth is expected to improve further on account of improving global demand, elevated commodity prices, especially of oil, may act as a drag on aggregate demand.

 

3:20 PM

OUTLOOK

 

RBI monetary policy committee

 

The projected moderation in inflation in the second half is on account of strong favourable base effects, including unwinding of the 7th CPC’s HRA impact, and a softer food inflation forecast, given the assumption of normal monsoon and effective supply management by the Government.

3:19 PM

OUTLOOK

 

RBI monetary policy committee

 

Taking these factors into consideration, CPI inflation for 2018-19 is estimated in the range of 5.1-5.6 per cent in H1, including diminishing statistical HRA impact of central government employees, and 4.5-4.6 per cent in H2, with risks tilted to the upside.

3:18 PM

OUTLOOK

 

RBI monetary policy committee

 

1. International crude oil prices have firmed up sharply since August 2017, driven by both demand and supply side factors.

 

2. Non-oil industrial raw material prices have also witnessed a global uptick. Firms polled in the Reserve Bank’s IOS expect input prices to harden in Q4. In a scenario of improving economic activity, rising input costs are likely to be passed on to consumers.

 

3. The inflation outlook will depend on the monsoon, which is assumed to be normal.

3:17 PM

OUTLOOK

 

RBI monetary policy committee: The inflation outlook beyond the current year is likely to be shaped by several factors

3:16 PM

3:12 PM

OUTLOOK

 

RBI monetary policy committee: Considering these factors, inflation is now estimated at 5.1 per cent in Q4, including the HRA impact.

3:12 PM

OUTLOOK

 

RBI monetary policy committee: Though prices eased in December, the winter seasonal food price moderation was less than usual. Domestic pump prices of petrol and diesel rose sharply in January, reflecting lagged pass-through of the past increases in international crude oil prices.

3:11 PM

Taxation of capital has an impact on investment and savings decisions, says RBI Governor Urjit Patel

3:11 PM

OUTLOOK

 

RBI monetary policy committee: The December bi-monthly resolution projected inflation in the range of 4.3-4.7 per cent in the second half of 2017-18, including the impact of increase in HRA. In terms of actual outcomes, headline inflation averaged 4.6 per cent in Q3, driven primarily by an unusual pick-up in food prices in November.

3:10 PM

Confluence of factors both domestic and external which influence our decision, says RBI Governor Urjit Patel