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    RBI Monetary Policy Highlights: Shaktikanta Das-led MPC holds rates, cuts GDP forecast, prioritises inflation before growth

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    RBI Monetary Policy Highlights: Shaktikanta Das-led MPC holds rates, cuts GDP forecast, prioritises inflation before growth

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    RBI Monetary Policy Highlights: RBI Governor Shaktikanta Das-led Monetary Policy Committee voted unanimously to keep the repo rate -- the key rate at which it lends short-term funds to commercial banks -- unchanged and continue with its 'accommodative' stance on Friday, April 8. This marks the 11th instance in a row when the central bank maintained a status quo on key rates. The MPC also left the reverse repo rate -- the rate at which it borrows funds -- unchanged. The RBI raised its consumer inflation projections for FY23, and lowered its estimates for GDP growth, and rephrased its stance to 'less accommodative' from 'accommodative'. Shaktikanta Das said the RBI has brought back inflation before growth in priority. In 2020, it had shifted its focus to growth from inflation to tackle the pandemic.

    RBI Monetary Policy Highlights: Shaktikanta Das-led MPC holds rates, cuts GDP forecast, prioritises inflation before growth
    • Thank you, readers! That's all from CNBCTV18.com's live coverage of the RBI's first bi-monthly review of FY23 on April 8, 2022. Stay tuned for other updates on our website: CNBCTV18.com.

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      Catch latest stock market updates with CNBCTV18.com's blog

    • Expect demand-side buoyancy to continue: Ajmera Realty's Dhaval Ajmera

      Dhaval Ajmera, Director at Ajmera Realty & Infra India, welcomes the RBI's status quo on the repo rate. He believes it is an assertive move despite domestic inflationary pressure and an uncertain global geopolitical environment.

      "With an objective to manage liquidity, the RBI has kept the reverse repo rate unchanged. Real estate, being one of the rate-sensitive sectors, welcomes the status quo. We expect demand side buoyancy to continue on the back of continuing lower housing loan rates,” he adds. 

    • Desposit rates have already risen, normalisation to continue: Axis Bank's Rajiv Anand 

      Rajiv Anand of Axis Bank believes deposit rates have already gone up. "If you look at non-retail term deposits, particularly the liquidity coverage ratio-friendly (LCR) deposits, and more importantly, the certificate of deposit (CD) rates, they've gone up by anything between 25 bps and 50 bps pre-March 31 itself. This normalisation of deposit rates will continue... Ultimately, banking is a marginal cost business. If deposit rates go up, it's inevitable that their lending rates will also go up as well," he says.

      "One of the things that was music to my ears as a corporate banker was the fact that capacity utilisations have now moved to 72 percent, which means that private capex is around the corner. The one piece that we have been all waiting for has been private capex; perhaps we are going to see that cycle kick off as we go forward," he adds. 

    • Low interest rates for a long period have served as a key catelyst for realty demand: Knight Frank India's Shishir Baijal

      Shishir Baijal, Chairman and Managing Director of Knight Frank India, welcomes the RBI's decision to stay 'accommodative' and to keep the repo rate unchanged. “Despite disruptions from geopolitical challenges as well as inflationary pressures, the RBI recognises the need to maintain economic growth momentum... For the real estate sector, low interest rates for a long period of time have served as a key catalyst for resurgence of demand," he says. 

      "The status quo on the repo rate will help maintain the current demand levels as interest rates for homebuyers and developers are likely to be maintained by financial institutions," he adds. 

      RBI Monetary Policy Highlights: Shaktikanta Das-led MPC holds rates, cuts GDP forecast, prioritises inflation before growth
    • Sensex, Nifty50 halt 3-day losing streak

      The Sensex ends 412.2 points or 0.7 percent higher at 59,447.2 and the Nifty50 settles at 17,784.4, up 144.8 points or 0.8 percent from its previous close.

      Both headline indices made a comeback after three straight sessions of losses.  

    • How rate-sensitive stocks fare in the final minutes of trade

      Banking Financial services Auto
      Stock Change (%) Stock Change (%) Stock Change (%)
      BANDHANBNK 2.4 CHOLAFIN 7.9 BALKRISIND 2.6
      FEDERALBNK 1.8 SBILIFE 4.7 M&M 2.5
      AUBANK 1.7 SRTRANSFIN 3.1 ASHOKLEY 2.3
      INDUSINDBK 1.1 ICICIPRULI 2.2 TVSMOTOR 2.2
      PNB 0.8 MUTHOOTFIN 1.2 BHARATFORG 2.2
      BANKBARODA 0.8 BAJAJFINSV 1.1 TIINDIA 1.8
      KOTAKBANK 0.7 BAJFINANCE 1 MRF 0.9
      ICICIBANK 0.7 HDFCLIFE 0.8 SONACOMS 0.7
      AXISBANK 0.3 RECLTD 0.5 TATAMOTORS 0.5
      SBIN 0.2 SBICARD -0.2 HEROMOTOCO 0.5
      HDFCBANK -0.2 HDFC -0.3 EICHERMOT 0.3
      IDFCFIRSTB -1.3 PFC -0.5 BOSCHLTD 0.2
          PEL -0.5 BAJAJ-AUTO 0.1
          HDFCAMC -0.6 MARUTI -1.3
          ICICIGI -1.2 ESCORTS -6.1

      Catch latest stock market updates with CNBCTV18.com's blog

    • RBI policy along expected lines: Muthoot Finance's George Alexander Muthoot

      George Alexander Muthoot, Managing Director at Muthoot Finance, says the RBI policy is along expected lines. "While there is an uncertainty around geopolitical tensions, high global crude oil prices are likely to keep input cost pressure elevated. However, there is still rising consumer confidence and optimistic business confidence. We are seeing improved demand both in urban and rural economy and more so, the robust rabi output is expected to support rural demand... We welcome the RBI’s extension of support towards the individual housing loan segment," he says. 

    • CNBC-TV18 Exclusive | HDFC's Deepak Parekh says don't think 50-100 bps higher rates going to dent loans

      He is of the view that the cost of money is going to be higher going ahead. (Read more)

    • Staying accommodative is the right approach: ICICI Securities' Prasenjit K Basu 

      Prasenjit K Basu, Chief Economist at ICICI Securities, believes the MPC's decision to stay 'accommodative' despite inflation marginally rising above its tolerance band is sensible. 

      Two reasons jusfity the RBI's policy action:

      --Inflation high partly because of supply shocks

      --Considerable output gap

      Staying accommodative is the right approach, he says. "Loan growth needs to accelerate to enable a rebound in domestic demand but the RBI will also withdraw accommodation tactically if inflation gets too far from its target," he adds. 

    • Experts see rate hikes of 50-100 bps in 2022

      Here's what experts CNBC-TV18 spoke expect from the RBI in the coming months: 

      R Sivakumar of Axis Mutual Fund expects rate hikes of 100 basis points in 2022. The market, in his view, is preparing for a large increase in the repo rate. 

      Kaushik Das of Deutsche Bank is looking at 50 basis points in rate hikes in 2022. He expects the RBI shifting its stance to 'normal' in June. 

      Madan Sabnavis of Bank of Baroda expect hikes of 50 basis points in 2022. 

      Ananth Narayan of SPJIMR sees a good chance of inflation crossing the six percent mark. The RBI has been behind the curve when it comes to its inflation projections. He sees rate hikes of 50-75 basis points this year.

    • Rate hike in FY23 to be lower than 50 basis points: Soumya Kanti Ghosh

      SBI Group Chief Economic Advisor Soumya Kanti Ghosh tells CNBC-TV18 that in his view, the rate hikes in the current financial year will be lower than 50 basis points. The RBI has taken positive steps to support non-traditional methods of buying government papers, he says. 

      A growth rate lower than the projected seven percent needs to be factored in, he adds.

    • Inflation can come in at lower levels than projected if war-like scenario gets over: Yes Bank's Indranil Pan

      "We can't sort of hold RBI hostage on whether the trajectory is correct or not. They have taken an assumption of $100 a barrel (crude oil)," says Indranil Pan, Chief Economist at Yes Bank. "If the war-like scenario gets over, and if there is some sort of stability that comes to the financial markets, we can see lower levels of inflation than what has been projected," he says. 

    • RBI will come out with guidelines on new ARC framework shortly: Rajeshwar Rao

      RBI Deputy Governor Rajeshwar Rao says the central bank is looking at potential amendments in KYC norms if required. 
                      

    • T Rabi Sankar says options being discussed on payments with Russia

      RBI Deputy Governor T Rabi Sankar says options are being discussed on payments with Russia. The RBI, he says, is ready to start a digital currency pilot project. 
      The RBI will take a calibrated approach towards the central bank digital currency (CBDC), and will start with a wholesale approach, he says.

      Sankar also said the discussion paper on digital transaction charges is nearing completion.

      RBI Monetary Policy Highlights: Shaktikanta Das-led MPC holds rates, cuts GDP forecast, prioritises inflation before growth
    • Reverse repo has no use for liquidity management as of now: Michael Patra

      RBI Deputy Governor Michael Patra says the reverse repo rate has no use for managing liquidity as of now. The RBI will use it as needed, he says. 

      The central bank has started the process of withdrawing accommodation, Patra adds. 

    • Expect upward movement in bond yields despite RBI status quo: Bajaj Allianz's Sampath Reddy

      Sampath Reddy, Chief Investment Officer of Bajaj Allianz Life, is of the view that even though the RBI has remained 'accommodative' and kept the key rates unchanged, the policy is likely to result in higher yields. "The higher inflation projection and shifting of the policy corridor to SDF would lead to higher bond yields," he says. 

    • HDFC-HDFC Bank merger proposal under examination: Shaktikanta Das

      HDFC and HDFC Bank shares enter the green, following three days of losses. HDFC shares rise as much as 1.3 percent to Rs 2,495 and the HDFC Bank stock gains as much as 0.5 percent to Rs 1,524.6. 

      Catch latest stock market updates with CNBCTV18.com's blog

      RBI Monetary Policy Highlights: Shaktikanta Das-led MPC holds rates, cuts GDP forecast, prioritises inflation before growth
    • Don't think RBI behind the curve: Shaktikanta Das 

      The RBI Governor says tectonic shifts have taken place globally since the February policy. "We are watchful of the changing situation; all instruments are on the table," he adds. 

      RBI Monetary Policy Highlights: Shaktikanta Das-led MPC holds rates, cuts GDP forecast, prioritises inflation before growth
    • RBI Governor gives confidence 'I am here, don't worry': Dimensions Corp's Ajay Srivastava

      "You need to learn a lesson on how to give bad news to the market in such a nice manner," says Ajay Srivastava, CEO of Dimensions Corporate Financial Services. "The RBI Governor brought down the growth estimate by half a percent and the market didn’t react, and he was straight-faced about it," he says.

      "I love the guy because he gives the confidence that 'I am there, don’t worry; I will take charge of it'. I think it’s wonderful,” Srivastava says. 

    • Repo rate, stance moves in line with expectations: Kotak Institutional Equities' Suvodeep Rakshit

      Suvodeep Rakshit, Senior Economist at Kotak Institutional Equities, says the RBI policy has decidedly shifted away from being dovish. The RBI’s concern on inflation has increased significantly especially with the FY23 average inflation estimate revised up, and that on growth relatively lower, he says.

      A commitment has also been made to start withdrawal of liquidity from FY23 and over the next few years, he says.

      "This policy strengthens our view that the first repo rate hike will be in the August policy. We expect the stance to be changed to “neutral” from “accommodative” in the June policy,” he adds. 

    • No proposal to allow non-banks to participate in standing deposit facility

      Both the standing deposit and marginal standing facilities will now move in tandem with any future revision in the repo rate, the RBI Governor says. 

    • Policy rates likely to gradually inch up over medium term: Axis Securities' Naveen Kulkarni

      Naveen Kulkarni, Chief Investment Officer at Axis Securities, believes that policy rates are likely to inch up gruadually over the medium term.

    • RBI has responded to new inflation, growth challenges: Abheek Barua

      Abheek Barua, Chief Economist at HDFC Bank, believes the RBI has responded to both to the new inflation and growth challenges that have emerged due to geopolitical tensions, which have manifested themselves in rising commodity prices. "While the RBI kept its monetary policy stance unchanged, it restored the policy corridor to pre-pandemic levels and provided a commitment towards a slow reduction of liquidity going forward... This is clearly a hawkish policy as compared to the February meeting, justified by the inflationary pressures that have emerged over the past month. The upward inflation forecast revision seems sensible given the broad-based nature of price increases," he says. 
       
      "Despite the increase in held-to-maturity (HTM) limits, bond yields are likely to go up given the sheer size of the borrowing program for FY23, he says.

      Barua expects the 10-year bond yield to rise to 7-7.25 percent in the first half of FY23.

      Catch latest stock market updates with CNBCTV18.com's blog

    • Shaktikanta Das lists 7 things RBI has done in Apr 8 policy

      --Revised inflation, growth projections 

      --Growth our next area of focus; inflation once again prioritised before growth

      --Stance remains accomodative, focus on withdrawal of accommodation

      --Liquidity adjustment facility corridor normalised

      --Standing deposit facility introduced; this will be the bottom of the corridor

      --Liquidity withdrawal to be done in a multi-year timeframe

      --Situation dynamic, fast-changing; RBI actions to be tailored accordingly

      RBI Monetary Policy Highlights: Shaktikanta Das-led MPC holds rates, cuts GDP forecast, prioritises inflation before growth
    • RBI move on rates, stance in line with expectations: Geojit's VK Vijayakumar

      VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, says the RBI's status quo on key rates and its stance is on expected lines.

      "Recognising the new reality of higher crude triggered by the Russia-Ukraine war, the RBI as expected reduced the FY23 GDP growth rate projection and raised the CPI inflation projection. This is based on the assumption of crude at $100 a barrel. This implies that growth and inflation can be better if crude declines sharply, that is if the war hopefully ends early. The reverse can be true if the war aggravates and crude spikes much above $100 a barrel," he says.

    • RBI's Q2 inflation estimate looks understated: Kotak Bank's Upasna Bhardwaj 

      Upasna Bhardwaj of Kotak Mahindra Bank is of the view that the central bank's inflation estimate for the second quarter looks understated. The RBI raised its inflation forecast for FY23 to 5.7 percent from 4.5 percent, but retained the projection for the second quarter of the financial year at 5 percent. 

      "Our H1 number is averaging around 6.4 percent. That's the huge deviation I see from RBI’s estimates and I think that would correct as we go into subsequent meetings, because clearly there are upside risks more in the near term and the pass-through of all the increasing input prices has to sail through somewhere. I do see upside, but I would say that RBI’s estimates now are relatively more realistic. There could be a 10-20 basis points of an upside to the numbers, but relatively, they are on board now compared to where they were in the February policy," she says. 

    • RBI fairly aggressive on inflation forecast: UTI MF's Amandeep Chopra

      Amandeep Chopra of UTI MF tells CNBC-TV18 that the key takeaway from RBI policy announcements for the bond markets is that the central bank has been fairly aggressive on its inflation forecast. "The markets were expecting the CPI forecast to be moved up to a 5-5.5 percent range. I think 5.7 was my view, a little higher than what the markets were expecting at the upper end," he says.

      Besides, the (liquidity adjustment facility) LAF corridor has been normalised to 50 basis points, but the interpretation is actually very different from what we have understood in terms of the LAF corridor. I must point out that the reverse repo rate is still at 3.35. What the RBI has essentially done is bring in this new element of the standing deposit facility (SDF), which they have priced it at 3.75 percent overnight. This is with reference to the repo rate," Chopra adds. 

      Catch latest stock market updates with CNBCTV18.com's blog

    • Will have to see what happens in bond yields in May, June: Jayesh Mehta

      Jayesh Mehta of Bank of America says he would not really look at the April yield as any indicator, but will monitor how it goes in May and June. "I'm sure they will support but how they support (will need to be watched)," he says. 

    • General expectation in banking industry that rates to move higher: SBI's CS Setty

      CS Setty of State Bank of India tells CNBC-TV18 that the general expectation in the banking industry in his view is that there will be some upward movement in interest rates. "Whether we will be able to increase the rates on loans also remains to be seen because generally the first quarter sees tepid loan growth. There may be a lag but the deposits. Obviously, banks will have to really seriously look into readjusting the rates; at least some of us, if not all," he says. 

      It may not be an across-the-board increase, he says. 

    • Inflation now projected to be higher, growth lower than February's expectations: Shaktikanta Das

      RBI Monetary Policy Highlights: Shaktikanta Das-led MPC holds rates, cuts GDP forecast, prioritises inflation before growth
    RBI Monetary Policy Highlights
    : RBI Governor Shaktikanta Das-led Monetary Policy Committee voted unanimously to keep the repo rate -- the key rate at which it lends short-term funds to commercial banks -- unchanged and continue with its 'accommodative' stance on Friday, April 8. This marks the 11th instance in a row when the central bank maintained a status quo on key rates. The MPC also left the reverse repo rate -- the rate at which it borrows funds -- unchanged. The RBI raised its consumer inflation projections for FY23, and lowered its estimates for GDP growth, and rephrased its stance to 'less accommodative' from 'accommodative'. Shaktikanta Das said the RBI has brought back inflation before growth in priority. In 2020, it had shifted its focus to growth from inflation to tackle the pandemic.

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