The Reserve Bank of India is expected to hold interest rates after the upcoming monetary policy committee meeting.

RBI likely to continue with rate pause: Analysts

In the latest updated from RBI MPC Meeting, the Central bank has raised the repo rate by 35 basis points to 6.25%; and has said that the inflation is likely to stay above 4% in next 12 months.

RBI raises repo rate by 35 basis points to 6.25 per cent

India`s central bank kept rates steady at record low levels as expected on Friday and said it would maintain support for the economy`s recovery from the pandemic by ensuring ample liquidity for markets to absorb a massive government borrowing programme.

"Going forward, the Indian economy is poised to move in only one direction and that is upwards. It is our strong conviction, backed by forecasts, that in 2021/22, we would undo the damage that COVID-19 has inflicted on the economy," Reserve Bank of India Governor Shaktikanta Das said after announcing the rate decision.

The repo rate or RBI`s key lending rate was held at 4% while the reverse repo rate or its borrowing rate was left unchanged at 3.35%.

The repo rate has been cut by a total 115 basis points since March 2020 to cushion the shock from the coronavirus pandemic, following a 135 bps reduction since beginning of 2019.

Das said the six members of the monetary policy committee (MPC) were unanimous in their decision to keep rates on hold.

Expert views:

Rupa Rege-Nitsure, Group Chief Economist, L&amp;T Financial Holdings, Mumbai

"While the MPC didn`t take any rate action, its assurance on retaining the accommodative stance and a few other measures to ease credit are positive from a growth perspective. However, gilt market players were expecting more specific calendar on open market operations and hence were disappointed."

"A decision to normalise the cash reserve ratio also reflects the MPC`s intent that excess liquidity will be absorbed gradually. The RBI`s support to direct credit measures rather is certainly praiseworthy."

Madhavi Arora, Lead Economist, Emkay Global Financial Services LTD., Mumbai

"Overall, we believe the RBI reiterated the dovish stance on rates and we see policy rates on status quo in FY22. The liquidity stance is unlikely to diverge from the accommodative policy stance in the near term. Meanwhile, we think the RBI will continue to ensure that money market skewness is being tackled, pressure on the longer end of the curve is managed well, and maintain its preference for curve flattening. Actions such as Operation Twist/OMOs will continue to smoothen the distribution of liquidity across the yield curve. We also watch out for introduction of tools like MSS bonds and/or Standing Deposit Facility etc. ahead."

Aurodeep Nandi, India Economist, Nomura. Mumbai

"The RBI clearly communicated that it doesn`t intend to yank away the liquidity carpet in a way that topples the vases of growth recovery and fiscal financing resting on it."

"Be it the extension of HTM dispensation or the unprecedented step of allowing retail investors to invest in government securities, or allaying market fears on the CRR normalization and reassuring that the hike in fact opens up space for further liquidity operations — all have been designed keeping in mind the smooth absorption of the government`s large borrowing programme."

"In the midst of this, the status quo in policy rates and dovish policy stance correctly takes into cognizance the current growth-inflation dynamics, and has been in line with our expectations."

Rajeev Radhakrishnan, CIO-Fixed Income, SBI Mutual Fund, Mumbai

"Maintaining status quo on rates and stance was the expected outcome of the policy review. But, lack of specific market intervention measures to ensure smooth absorption of the enhanced market borrowings remains the key disappointment from the fixed-income market perspective."

"Providing retail investors a direct avenue to invest in government securities is a welcome announcement from a longer-term perspective."

"While the promise of additional liquidity infusion post the unwinding of the CRR cut in two phases by Q1 FY22 holds the promise of OMO interventions, the immediate market action is a fair reflection of market absorption capacity."

"In the absence of direct and more specific up-front market intervention through OMO/Twist, near-term concerns remain of a gradual uptick in bond yields and continued uncertainty on the demand side as the borrowing program commences for FY22."

Shashank Mendiratta, Economist, IBM, New Delhi

"The RBI provided an upbeat assessment on the economy, highlighting that the outlook has improved significantly. We concur with this assessment as high frequency indicators also point to a gradual normalisation of activity. The central bank also emphasised on the importance of higher fiscal spending, particularly capex to support recovery. While the RBI was sanguine on the near-term food-price outlook, the assessment on core inflation was cautious amid rise in input prices."

"The normalisation of economic activity, amid a strong fiscal push, have reduced the need for rate-cuts. The RBI is likely to remain on a prolonged pause through 2021. Having said that, the central bank will continue to remain in an accommodative stance to nurture the recovery."

Sakshi Gupta, Senior Economist, HDFC Bank, Gurugram

"With significant government borrowings in the first-half, rising inflation risks, and lower liquidity surplus, bond yields are likely to remain under pressure, going ahead. We expect bond yields to trade between 5.95% and 6.10% in the first half of fiscal 2022."

"On inflation estimates, the RBI did sound some caution in terms of inflation risks in the year ahead and revised up its H1 inflation estimate to 5%-5.2%. We expect inflation to average at 5.3% in H1. Over the medium term, one must keep in mind that an expansionary fiscal policy is structurally inflationary and should be watched out for."

Radhika Rao, Economist, DBS Bank, Singapore

"The RBI`s assessment was nuanced, with FY22 growth estimate set at a firm 10.5% y/y while looking beyond the near-term cool off in inflation and flagging risks that core inflation might prove sticky owing to demand impulses from a revival in economic activity and higher commodity prices. The budget`s investment and social sector orientation were seen as improving the quality of the fiscal math and as a positive for potential growth."

"Bond markets were met with some support, firstly an extension of the HTM enhancement to March 2023 and widening the investor pool by allowing retail investors direct access to gilts through the RBI, but an explicit OMO/OT announcement was absent, leading to a bearish reaction in bond prices. Cost of financing (risk-free rates) is, nonetheless, likely to settle at a slightly higher level as activity normalises."

"On liquidity, the RBI clarified that the overall stance was still accommodative whilst liquidity is likely to be withdrawn in a calibrated pace to prevent a dilution in the policy transmission. CRR normalisation remains on track, with a staggered restoration."

Anagha Deodhar, Chief Economist, ICICI Securities, Mumbai

"We expect inflation to come down in the coming months. The MPC expects real GDP to grow 10.5% in FY22 and inflation to print at 5%-5.2% in the second half of fiscal 2022."

"On the regulatory front, the most important announcements are two-phased normalisation of CRR, extending HTM limit for SLR holdings, deferment of capital conservation buffer and allowing retail investment in gilts. Overall, the MPC`s decision bodes well for growth and financial stability."

Garima Kapoor, Economist - Institutional Equities, Elara Capital, Mumbai

"Dispelling worries of possible hardening of market rates owing to the expected high supply of government bonds in FY22, the RBI today extended its accommodative stance to liquidity and hinted that it would stand pat to support the government`s borrowing program."

"While there was no surprise with respect to the rate decision, we believe the decision to allow a retail investor to have direct access to participate in G-sec market is revolutionary and path-breaking."

"The RBI will have to walk a tight rope in FY22 in balancing growth-inflation dynamics amid a huge supply of government bonds."

Kunal Kundu, India Economist, Societe Generale, Bengaluru

"Given that the monetary policy framework is up for review in March, it made no sense to cut the policy rate in this meeting. For January, we expect the inflation to drop marginally to 4.4% yoy from 4.6%. More importantly though, with inflation heading decisively towards the RBI`s median target of 4%, we are quite comfortable with our call of the next rate-cut during Q2 of 2020."

"Importantly, the RBI talked about supporting growth. We would likely see the RBI coming to the aid of the government, even in the fiscal space either by opting for debt monetization or sharing a portion of their excess reserve so that the fund can be used specifically for infrastructure development."

"This is all the more so given that we see a good possibility that the budgeted public capex for FY22 will fall short of the target unless the RBI gets into the act."

Prithviraj Srinivas, Chief Economist, Axis Capital, Mumbai

"The RBI kept policy rate on hold as expected and reiterated its accommodative stance. The operative word in today`s (Friday) policy was the governor`s reiteration of a previous statement that `orderly evolution of bond markets was a public good`. The bank`s inflation projection at 5% in the coming quarters reflects non-food price pressures currently seen in the economy which should keep the central bank watchful, even as economic recovery speeds up and liquidity remains bountiful on capital inflows as well as a large public borrowing programme."

India`s central bank kept rates steady at record low levels as expected on Friday and said it would maintain support for the economy`s recovery from the pandemic by ensuring ample liquidity for markets to absorb a massive government borrowing programme.

India`s central bank kept rates steady at record low levels as expected on Friday and said it would maintain support for the economy`s recovery from the pandemic by ensuring ample liquidity for markets to absorb a massive government borrowing programme. "Going forward, the Indian economy is poised to move in only one direction and that is upwards. It is our strong conviction, backed by forecasts, that in 2021/22, we would undo the damage that COVID-19 has inflicted on the economy," Reserve Bank of India Governor Shaktikanta Das said after announcing the rate decision. The repo rate or RBI`s key lending rate was held at 4% while the reverse repo rate or its borrowing rate was left unchanged at 3.35%. The repo rate has been cut by a total 115 basis points since March 2020 to cushion the shock from the coronavirus pandemic, following a 135 bps reduction since beginning of 2019. Das said the six members of the monetary policy committee (MPC) were unanimous in their decision to keep rates on hold. Expert views: Rupa Rege-Nitsure, Group Chief Economist, L&T Financial Holdings, Mumbai "While the MPC didn`t take any rate action, its assurance on retaining the accommodative stance and a few other measures to ease credit are positive from a growth perspective. However, gilt market players were expecting more specific calendar on open market operations and hence were disappointed." "A decision to normalise the cash reserve ratio also reflects the MPC`s intent that excess liquidity will be absorbed gradually. The RBI`s support to direct credit measures rather is certainly praiseworthy." Madhavi Arora, Lead Economist, Emkay Global Financial Services LTD., Mumbai "Overall, we believe the RBI reiterated the dovish stance on rates and we see policy rates on status quo in FY22. The liquidity stance is unlikely to diverge from the accommodative policy stance in the near term. Meanwhile, we think the RBI will continue to ensure that money market skewness is being tackled, pressure on the longer end of the curve is managed well, and maintain its preference for curve flattening. Actions such as Operation Twist/OMOs will continue to smoothen the distribution of liquidity across the yield curve. We also watch out for introduction of tools like MSS bonds and/or Standing Deposit Facility etc. ahead." Aurodeep Nandi, India Economist, Nomura. Mumbai "The RBI clearly communicated that it doesn`t intend to yank away the liquidity carpet in a way that topples the vases of growth recovery and fiscal financing resting on it." "Be it the extension of HTM dispensation or the unprecedented step of allowing retail investors to invest in government securities, or allaying market fears on the CRR normalization and reassuring that the hike in fact opens up space for further liquidity operations — all have been designed keeping in mind the smooth absorption of the government`s large borrowing programme." "In the midst of this, the status quo in policy rates and dovish policy stance correctly takes into cognizance the current growth-inflation dynamics, and has been in line with our expectations." Rajeev Radhakrishnan, CIO-Fixed Income, SBI Mutual Fund, Mumbai "Maintaining status quo on rates and stance was the expected outcome of the policy review. But, lack of specific market intervention measures to ensure smooth absorption of the enhanced market borrowings remains the key disappointment from the fixed-income market perspective." "Providing retail investors a direct avenue to invest in government securities is a welcome announcement from a longer-term perspective." "While the promise of additional liquidity infusion post the unwinding of the CRR cut in two phases by Q1 FY22 holds the promise of OMO interventions, the immediate market action is a fair reflection of market absorption capacity." "In the absence of direct and more specific up-front market intervention through OMO/Twist, near-term concerns remain of a gradual uptick in bond yields and continued uncertainty on the demand side as the borrowing program commences for FY22." Shashank Mendiratta, Economist, IBM, New Delhi "The RBI provided an upbeat assessment on the economy, highlighting that the outlook has improved significantly. We concur with this assessment as high frequency indicators also point to a gradual normalisation of activity. The central bank also emphasised on the importance of higher fiscal spending, particularly capex to support recovery. While the RBI was sanguine on the near-term food-price outlook, the assessment on core inflation was cautious amid rise in input prices." "The normalisation of economic activity, amid a strong fiscal push, have reduced the need for rate-cuts. The RBI is likely to remain on a prolonged pause through 2021. Having said that, the central bank will continue to remain in an accommodative stance to nurture the recovery." Sakshi Gupta, Senior Economist, HDFC Bank, Gurugram "With significant government borrowings in the first-half, rising inflation risks, and lower liquidity surplus, bond yields are likely to remain under pressure, going ahead. We expect bond yields to trade between 5.95% and 6.10% in the first half of fiscal 2022." "On inflation estimates, the RBI did sound some caution in terms of inflation risks in the year ahead and revised up its H1 inflation estimate to 5%-5.2%. We expect inflation to average at 5.3% in H1. Over the medium term, one must keep in mind that an expansionary fiscal policy is structurally inflationary and should be watched out for." Radhika Rao, Economist, DBS Bank, Singapore "The RBI`s assessment was nuanced, with FY22 growth estimate set at a firm 10.5% y/y while looking beyond the near-term cool off in inflation and flagging risks that core inflation might prove sticky owing to demand impulses from a revival in economic activity and higher commodity prices. The budget`s investment and social sector orientation were seen as improving the quality of the fiscal math and as a positive for potential growth." "Bond markets were met with some support, firstly an extension of the HTM enhancement to March 2023 and widening the investor pool by allowing retail investors direct access to gilts through the RBI, but an explicit OMO/OT announcement was absent, leading to a bearish reaction in bond prices. Cost of financing (risk-free rates) is, nonetheless, likely to settle at a slightly higher level as activity normalises." "On liquidity, the RBI clarified that the overall stance was still accommodative whilst liquidity is likely to be withdrawn in a calibrated pace to prevent a dilution in the policy transmission. CRR normalisation remains on track, with a staggered restoration." Anagha Deodhar, Chief Economist, ICICI Securities, Mumbai "We expect inflation to come down in the coming months. The MPC expects real GDP to grow 10.5% in FY22 and inflation to print at 5%-5.2% in the second half of fiscal 2022." "On the regulatory front, the most important announcements are two-phased normalisation of CRR, extending HTM limit for SLR holdings, deferment of capital conservation buffer and allowing retail investment in gilts. Overall, the MPC`s decision bodes well for growth and financial stability." Garima Kapoor, Economist - Institutional Equities, Elara Capital, Mumbai "Dispelling worries of possible hardening of market rates owing to the expected high supply of government bonds in FY22, the RBI today extended its accommodative stance to liquidity and hinted that it would stand pat to support the government`s borrowing program." "While there was no surprise with respect to the rate decision, we believe the decision to allow a retail investor to have direct access to participate in G-sec market is revolutionary and path-breaking." "The RBI will have to walk a tight rope in FY22 in balancing growth-inflation dynamics amid a huge supply of government bonds." Kunal Kundu, India Economist, Societe Generale, Bengaluru "Given that the monetary policy framework is up for review in March, it made no sense to cut the policy rate in this meeting. For January, we expect the inflation to drop marginally to 4.4% yoy from 4.6%. More importantly though, with inflation heading decisively towards the RBI`s median target of 4%, we are quite comfortable with our call of the next rate-cut during Q2 of 2020." "Importantly, the RBI talked about supporting growth. We would likely see the RBI coming to the aid of the government, even in the fiscal space either by opting for debt monetization or sharing a portion of their excess reserve so that the fund can be used specifically for infrastructure development." "This is all the more so given that we see a good possibility that the budgeted public capex for FY22 will fall short of the target unless the RBI gets into the act." Prithviraj Srinivas, Chief Economist, Axis Capital, Mumbai "The RBI kept policy rate on hold as expected and reiterated its accommodative stance. The operative word in today`s (Friday) policy was the governor`s reiteration of a previous statement that `orderly evolution of bond markets was a public good`. The bank`s inflation projection at 5% in the coming quarters reflects non-food price pressures currently seen in the economy which should keep the central bank watchful, even as economic recovery speeds up and liquidity remains bountiful on capital inflows as well as a large public borrowing programme."

RBI holds interest rates steady at record lows as economic outlook improves

The Reserve Bank of India(RBI) today announced that key rates will remain unchanged.

The RBI kept repo rate unchanged at 4 per cent.&nbsp;RBI governor Shaktikanta Das declared that reverse repo rate also remains unchanged at 3.3 per cent.

<a href="https://www.wionews.com/opinions-blogs/cooperative-banks-now-subject-to-regulation-by-reserve-bank-of-india-317300">Also Read:&nbsp;Cooperative banks now subject to regulation by Reserve Bank of India</a>

While making the announcement, RBI governor Shaktikanta Das said that global financial markets remain buoyant, although he added that exports have contracted for the fourth straight month in June.

India's central bank said that the country's forex reserves are up by $56.8 billion, however it added that GDP growth will remain negative in the first half of the current year.

"For the year 2020-21 as a whole, real GDP growth is also estimated to be negative," it said.

The RBI governor added that although economic activity had picked up however due to fresh surge of coronavirus and lockdowns, several high-frequency indicators had levelled off.

"With coronavirus infections rising under fragile micro-economic and financial conditions, we propose to take regulatory and developmental measures including enhancing liquidity support for financial markets, ease financial stress caused by the virus while strengthening credit discipline," Shaktikanta Das stated.

The Reserve Bank of India(RBI) today announced that key rates will remain unchanged. The RBI kept repo rate unchanged at 4 per cent. RBI governor Shaktikanta Das declared that reverse repo rate also remains unchanged at 3.

The Reserve Bank of India(RBI) today announced that key rates will remain unchanged. The RBI kept repo rate unchanged at 4 per cent. RBI governor Shaktikanta Das declared that reverse repo rate also remains unchanged at 3.3 per cent. Also Read: Cooperative banks now subject to regulation by Reserve Bank of India While making the announcement, RBI governor Shaktikanta Das said that global financial markets remain buoyant, although he added that exports have contracted for the fourth straight month in June. India's central bank said that the country's forex reserves are up by $56.8 billion, however it added that GDP growth will remain negative in the first half of the current year. "For the year 2020-21 as a whole, real GDP growth is also estimated to be negative," it said. The RBI governor added that although economic activity had picked up however due to fresh surge of coronavirus and lockdowns, several high-frequency indicators had levelled off. "With coronavirus infections rising under fragile micro-economic and financial conditions, we propose to take regulatory and developmental measures including enhancing liquidity support for financial markets, ease financial stress caused by the virus while strengthening credit discipline," Shaktikanta Das stated.

Reserve Bank of India keeps key rates unchanged; exports contract for fourth straight month

RBI governor Shaktikanata Das address amid Covid-19 outbreak. Rbi lowered the key repo rate by 75 basis points (bps) to 4.4 per cent, to help the economic slowdown in the wake of the coronavirus outbreak. The reverse repo rate now stands at 4 per cent, down 90 bps.

RBI briefing amid coronavirus outbreak | Slashes Repo rate by 75 bps

The monetary policy committee (MPC) of the <a href="https://www.wionews.com/india-news/reserve-bank-of-india-to-transfer-surplus-of-rs-176-lakh-crore-to-government-key-points-246060">Reserve Bank of India</a> (RBI) on Friday has cut its benchmark repo rate by 25 basis points to 5.15 per cent, in the fifth straight interest rate cut.

The central bank maintained its accommodative policy stance.&nbsp;The&nbsp;GDP growth for 2019-20 has been revised downwards from 6.9 per cent in the August policy to 6.1 per cent.

RBI has said that there is space to cut repo rates further.

Watch: RBI credit policy - central bank cuts rate by 25 bps to 5.15%

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The reverse repo rate has been reduced to 4.9 per cent, and the bank rate stands at 5.40 per cent.&nbsp;

The six-member <a href="https://www.wionews.com/india-news/social-media-rumours-of-banks-shutting-down-false-reserve-bank-of-india-252026">monetary policy committee</a> (MPC) headed by Governor Shaktikanta Das announced the decision after a three-day meeting.&nbsp;

Earlier on February 7, April 4, June 6 and Aug 7, the central bank had reduced the key lending rate to infuse liquidity and push economic growth.

Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers and lowers equal monthly instalments on home loans, car loans and personal loans.

India's economy grew by only 6.8 per cent in 2018-19, according to government data. GDP growth slumped lower to 5 per cent in the April to June quarter as against an 8 per cent in the year-ago period due to weak household spending, muted corporate investments, and a crippling slowdown in manufacturing and construction activity. Industry leaders say a substantial cut in the repo rate and bank lending rates are needed to boost manufacturing and domestic demand for economic growth.

(With inputs from ANI)

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) on Friday has cut its benchmark repo rate by 25 basis points to 5.15 per cent, in the fifth straight interest rate cut.

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) on Friday has cut its benchmark repo rate by 25 basis points to 5.15 per cent, in the fifth straight interest rate cut. The central bank maintained its accommodative policy stance. The GDP growth for 2019-20 has been revised downwards from 6.9 per cent in the August policy to 6.1 per cent. RBI has said that there is space to cut repo rates further. Watch: RBI credit policy - central bank cuts rate by 25 bps to 5.15% × The reverse repo rate has been reduced to 4.9 per cent, and the bank rate stands at 5.40 per cent. The six-member monetary policy committee (MPC) headed by Governor Shaktikanta Das announced the decision after a three-day meeting. Earlier on February 7, April 4, June 6 and Aug 7, the central bank had reduced the key lending rate to infuse liquidity and push economic growth. Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers and lowers equal monthly instalments on home loans, car loans and personal loans. India's economy grew by only 6.8 per cent in 2018-19, according to government data. GDP growth slumped lower to 5 per cent in the April to June quarter as against an 8 per cent in the year-ago period due to weak household spending, muted corporate investments, and a crippling slowdown in manufacturing and construction activity. Industry leaders say a substantial cut in the repo rate and bank lending rates are needed to boost manufacturing and domestic demand for economic growth. (With inputs from ANI)

Reserve Bank of India cuts repo rate by 25 bps,  from 5.40 per cent to 5.15 per cent

The Reserve Bank of India has hiked its repo rate by 25 basis points to 6.25%.&nbsp;

This is the first hike in over four years.&nbsp;

The reverse repo rate has been hiked to 6.5%.&nbsp;

The repo rate is the rate of interest at which the RBI loans money to other banks. The repo rate then determines the rate of interest at which the banks loan money to their customers.&nbsp;

A hike in the repo rate will mean an increase in the EMIs of people who have borrowed money at fluctuating rates.&nbsp;

The reverse repo rate is the rate at which the RBI borrows money from the market.&nbsp;

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Reserve Bank of India (RBI) projects inflation for 2018-19 at 4.8- 4.9% in first half and 4.7% in the second half of the year, projection for GDP is 7.5-7.6 in first half and 7.3-7.4 in the second half.
— ANI (@ANI) <a href="https://twitter.com/ANI/status/1004288695942254595?ref_src=twsrc%5Etfw">June 6, 2018</a></blockquote>
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The RBI meanwhile projected inflation for 2018-19 at 4.8- 4.9% in the first half and 4.7% in the second half of the year.&nbsp;

Its GDP projection was 7.5-7.6% for the first half and 7.3-7.4% in the second half.

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Gross domestic product (GDP) growth for 2017-18 has been revised & estimated at 6.7% backed by an all time high production of food grains and horticulture, strengthening of industrial growth and resilient services sector activity: RBI Guv Urjit Patel <a href="https://t.co/3Eam0qniRf">pic.twitter.com/3Eam0qniRf</a>
— ANI (@ANI) <a href="https://twitter.com/ANI/status/1004298584139841536?ref_src=twsrc%5Etfw">June 6, 2018</a></blockquote>
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&nbsp;

This was the first hike in over 4 years. The reverse repo rate is now 6.5%

The Reserve Bank of India has hiked its repo rate by 25 basis points to 6.25%. This is the first hike in over four years. The reverse repo rate has been hiked to 6.5%. The repo rate is the rate of interest at which the RBI loans money to other banks. The repo rate then determines the rate of interest at which the banks loan money to their customers. A hike in the repo rate will mean an increase in the EMIs of people who have borrowed money at fluctuating rates. The reverse repo rate is the rate at which the RBI borrows money from the market. Reserve Bank of India (RBI) projects inflation for 2018-19 at 4.8- 4.9% in first half and 4.7% in the second half of the year, projection for GDP is 7.5-7.6 in first half and 7.3-7.4 in the second half. — ANI (@ANI) June 6, 2018 × The RBI meanwhile projected inflation for 2018-19 at 4.8- 4.9% in the first half and 4.7% in the second half of the year. Its GDP projection was 7.5-7.6% for the first half and 7.3-7.4% in the second half. Gross domestic product (GDP) growth for 2017-18 has been revised & estimated at 6.7% backed by an all time high production of food grains and horticulture, strengthening of industrial growth and resilient services sector activity: RBI Guv Urjit Patel pic.twitter.com/3Eam0qniRf — ANI (@ANI) June 6, 2018 ×

RBI hikes repo rate to 6.25%, EMIs to get costlier

The Reserve Bank of India kept its policy rates on hold for the fourth straight meeting on Thursday and retained its "neutral" stance even as inflationary pressures have eased more than expected.

The RBI kept its policy repo rate unchanged at 6.00 per cent, its lowest since November 2010.

The reverse repo rate also remained unchanged at 5.75 per cent.

Five of six members on the monetary policy committee voted for a hold, while one wanted a hike in the repo rate.

Inflation concerns have eased substantially following a crash in vegetable prices which is expected to keep price pressures soft for the next few months.

However, oil prices remain a risk, with India importing about 80 per cent of its crude requirement.

Bonds rose after the RBI's statement, while the rupee firmed and stocks extended early gains.

The 10-year benchmark bond yield fell to 7.19 per cent from 7.28 percent before the announcement, while the rupee was trading at 64.95 to the dollar from 65.04 before. The main market index was up 1.8 per cent.

INFLATION EASING, GROWTH

The RBI projected economic growth of 7.4 per cent for the current fiscal year that began on April 1.

It also lowered its April-September inflation projection to 4.7-5.1 per cent from February's 5.1-5.6 per cent.

After hitting a 17-month high in December, retail inflation eased for the second straight month in February and by more than expected, to a four-month low of 4.44 per cent. But it was still higher than the central bank's medium term target of 4 percent.

That has prompted most market watchers to push back their forecasts for a rate hike to early 2019, from earlier estimates of the second half of this year.

While inflation fears have eased in the short-term, the RBI sounded cautious and opted to wait for more data instead of giving a clear indication of its policy path.

"The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis," the RBI said in a statement.

The RBI is also mindful of the pace of India's economic recovery, after a loan-fraud scandal worth over $2 billion at the country's second largest state lender Punjab National Bank.

Greater regulatory scrutiny in the wake of the scandal could make banks more wary of lending, slowing down business activity after India's economy grew 7.2 percent in the October-December, its fastest in five quarters.

The reverse repo rate was also unchanged at 5.75 per cent.

The Reserve Bank of India kept its policy rates on hold for the fourth straight meeting on Thursday and retained its "neutral" stance even as inflationary pressures have eased more than expected. The RBI kept its policy repo rate unchanged at 6.00 per cent, its lowest since November 2010. The reverse repo rate also remained unchanged at 5.75 per cent. Five of six members on the monetary policy committee voted for a hold, while one wanted a hike in the repo rate. Inflation concerns have eased substantially following a crash in vegetable prices which is expected to keep price pressures soft for the next few months. However, oil prices remain a risk, with India importing about 80 per cent of its crude requirement. Bonds rose after the RBI's statement, while the rupee firmed and stocks extended early gains. The 10-year benchmark bond yield fell to 7.19 per cent from 7.28 percent before the announcement, while the rupee was trading at 64.95 to the dollar from 65.04 before. The main market index was up 1.8 per cent. INFLATION EASING, GROWTH The RBI projected economic growth of 7.4 per cent for the current fiscal year that began on April 1. It also lowered its April-September inflation projection to 4.7-5.1 per cent from February's 5.1-5.6 per cent. After hitting a 17-month high in December, retail inflation eased for the second straight month in February and by more than expected, to a four-month low of 4.44 per cent. But it was still higher than the central bank's medium term target of 4 percent. That has prompted most market watchers to push back their forecasts for a rate hike to early 2019, from earlier estimates of the second half of this year. While inflation fears have eased in the short-term, the RBI sounded cautious and opted to wait for more data instead of giving a clear indication of its policy path. "The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis," the RBI said in a statement. The RBI is also mindful of the pace of India's economic recovery, after a loan-fraud scandal worth over $2 billion at the country's second largest state lender Punjab National Bank. Greater regulatory scrutiny in the wake of the scandal could make banks more wary of lending, slowing down business activity after India's economy grew 7.2 percent in the October-December, its fastest in five quarters.

RBI keeps repo rate unchanged at 6%, cuts inflation forecast

The BSE Sensex rose over 600 points after the Reserve Bank of India kept its repo rate unchanged at 6 per cent. The reverse repo rate was also kept unchanged at 5.75 per cent.&nbsp

The Nifty meanwhile rose over 200 points.&nbsp

The bank had been expected to stick to its 'neutral' stance to support an early recovery in economic growth as inflation eases.&nbsp

The Sensex finally closed 577.73 points (1.75%) up at 33,596.80, while the Nifty closed 196.75 points (1.94%) up at 10,325.15.&nbsp

The stock market had been rising Thursday even before the central bank announced its new rates.&nbsp

The shares were tracking global equity markets that recovered after fears of a Sino-US trade war eased, with metal stocks such as Hindalco Industries Ltd and banks such as ICICI Bank Ltd among top gainers.

The United States expressed willingness to negotiate a resolution to the trade dispute with China after Beijing retaliated against proposed US tariffs on $50 billion in Chinese goods by targeting key American imports.

"All sectors which were impacted yesterday, including metals, are recovering today mainly because the fears of escalation in trade wars have receded, at least for the time-being," said Deepak Jasani, head of retail research at HDFC Securities.

(With inputs from Reuters)

The Sensex finally closed 577.73 points (1.75%) up at 33,596.80, while the Nifty closed 196.75 points (1.94%) up at 10,325.15

The BSE Sensex rose over 600 points after the Reserve Bank of India kept its repo rate unchanged at 6 per cent. The reverse repo rate was also kept unchanged at 5.75 per cent. The Nifty meanwhile rose over 200 points. The bank had been expected to stick to its 'neutral' stance to support an early recovery in economic growth as inflation eases. The Sensex finally closed 577.73 points (1.75%) up at 33,596.80, while the Nifty closed 196.75 points (1.94%) up at 10,325.15. The stock market had been rising Thursday even before the central bank announced its new rates. The shares were tracking global equity markets that recovered after fears of a Sino-US trade war eased, with metal stocks such as Hindalco Industries Ltd and banks such as ICICI Bank Ltd among top gainers. The United States expressed willingness to negotiate a resolution to the trade dispute with China after Beijing retaliated against proposed US tariffs on $50 billion in Chinese goods by targeting key American imports. "All sectors which were impacted yesterday, including metals, are recovering today mainly because the fears of escalation in trade wars have receded, at least for the time-being," said Deepak Jasani, head of retail research at HDFC Securities. (With inputs from Reuters)

Sensex rises over 600 points after RBI keeps lending rates unchanged