• Tue. Oct 4th, 2022

RBI POLICY – Stock Trader, Investor, Researcher and Analyst, EMMKAY-RA TRADERS

RBI POLICY - Stock Trader, Investor, Researcher and Analyst, EMMKAY-RA TRADERS


RBI POLICY

*RBI Monetary Policy – Key Takeaways*

*KEY TAKEAWAYS*

* Repo rate unchanged at 5.15%

* Reverse repo rate stays unchanged at 4.90%

* MSF, Bank Rate unchanged at 5.40%

* MPC unanimously votes for status quo on repo rate

* Based on CPI-GDP dynamics, MPC felt pause was appropriate

* MPC recognises “there is monetary policy space for future”

 

*POLICY STANCE*

* MPC to continue with accommodative stance

* MPC’s accommodative stance “as long as it is necessary”

* MPC stance aimed to revive growth while ensuring CPI in band

 

*INFLATION*

* CPI projection raised to 4.7-5.1% Oct-Mar

* CPI projection raised to 3.8-4.0% Apr-Sep 2020

* Risks to inflation projections “broadly balanced”

* MPC sees inflation rising in near-term

* MPC sees CPI moderate below target by Jul-Sep 2020

* Need to carefully monitor fresh data for CPI outlook clarity

 

*ECONOMY*

* FY20 real GDP growth seen 5.0% from 6.1% set in Oct

* Oct-Mar GDP seen 4.9-5.5%

* Apr-Sep 2020 GDP seen 5.9-6.3%

* MPC notes economic activity has weakened further

* MPC sees govt, policy steps gradually feed into real economy

* Data showing some early signs of recovery in invest activity

* Need to see sustainability of investment activity recovery

* MPC sees need to address impediments holding back investment

* MPC sees external benchmarks strengthen monetary transmission

* Need greater flexibility in small savings rate adjustments

* See FY21 Budget provide insight into further steps by govt

* see FY21 Budget shed light on govt policy impact on growth

* MPC meeting minutes to be published on Dec 19

* Next MPC meeting to be held from Feb 4-6

* Delay in domestic demand revival downside risk for GDP

* Slower domestic demand reflecting in softening in CPI

* See price rise in milk, pulses, sugar sustaining

* Oct CPI print “was much higher than expected”

* FX reserves at $451.7 bln on Dec 3, up $38.8 bln from Mar 31

* Net disbursals of FX borrowings up $11.5 bln Apr-Oct

* Median bank term deposit rates down 47 bps Feb-Nov

* Bank deposit rate down by 9 bps Oct vs just 7 bps in Feb-Sep

* Fall in deposit rate augurs well for loan rate transmission



Image and article originally from www.marketdrona.com. Read the original article here.