RBI Monetary Policy Highlights: Repo Rate Hiked; Inflation Seen At 6.7%, GDP Growth At 7% In FY23
RBI has raised the repo rate by 50 bps to 5.9%, even as it retained the inflation forecast and cut GDP growth estimate for FY23.
The Reserve Bank of India's Monetary Policy Committee has raised its benchmark repo rate by 50 basis points to 5.9% to counter the sticky inflation in the Indian economy.
The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.
Key Highlights Of RBI Monetary Policy:
Five out of six MPC members voted in favour of 50 bps rate hike.
The standing deposit facility rate, pegged 25 basis points below the repo rate, is adjusted to 5.65%.
The marginal standing facility rate, which is 25 basis points above the repo rate, is now at 6.15%.
The committee had first raised rates by 40 basis points at an unscheduled meeting in May, followed by 50 basis points in June and 50 basis points in August.
"Monetary and liquidity conditions remain accommodative," RBI Governor Shaktikanta Das said in his monetary policy speech on Friday, even as he announced merging the 28-day Variable Rate Reverse Repo, with the 14 day VRRR auctions.
"The monetary policy committee remains focused on withdrawal of accommodation to ensure that inflation remains within target while supporting growth," Das said.
Watch Das' full monetary policy speech here:
Is RBI Targeting 2019 Rate Levels For A 'Neutral' Stance?
"The issue is not the sojourn, but the journey," said RBI Deputy Governor Michael Patra when asked if the central bank is targetting 2019 interest-rate levels to move to a neutral policy stance. "And the journey has two milestones--when inflation gets into the tolerance band and when it aligns with the target. You’ll know then."
RBI Doesn't Have A Rupee Level In Mind, Das Says
The Reserve Bank of India doesn't have a rupee level in mind, RBI Governor Shaktikanta Das says. Earlier, he had said that the rupee is a freely floating currency whose exchange rate is market determined.
That, when the Indian rupee is testing 82/dollar levels.
MPC Yet To Discuss Letter To Govt On Inflation, Das Says
India's Monetary Policy Committee is yet to meet to discuss RBI's letter to the government on inflation consistently breaching the central bank's target, Das says.
"We are expecting inflation to come down close to the target over a two-year cycle. That was our expectation earlier and even now," Das says. "But there are so many uncertainties coming in from time to time."
RBI Monetary Policy Live: On Card Tokenisation
In September itself, 40% of online transactions were undertaken using tokens, RBI Deputy Governor T Rabi Sankar says at the post-policy presser.
Roughly 35 crore card tokens have already been created.
The feedback is that the system is perfectly ready.
"We don't believe we should hold back steps to enhance customer safety due to a few laggards," Sankar says.
RBI MPC Meet Live: On Global Monetary Policy Tightening
The actions taken by major central banks to combat inflation has indeed been a shock, RBI Governor Shaktikanta Das says. Nobody is blaming them, he says, but "we are dealing with the spillover of their actions".
It has further accentuated the situation in the global markets.
It has created excessive volatility in the currency market.
Global currencies are depreciating, bond yields are very volatile.
The third shock has added to the uncertainty that has been prevailing.
"The forward guidance of the U.S. Fed talks about future rate hikes, which are large," Das says. "The stress on global markets has increased by the actions taken by the global central banks."
“Soft landing is meant for advanced economies. For India, it is a take off."Michael Patra, RBI Deputy Governor
