RBI MPC Meeting Highlights: Home, personal loan EMIs set to further increase as RBI raises key rates - more hikes on cards?
RBI MPC Meeting December 2022 Live Updates: The key benchmark lending rate has been hiked 50 basis points (bps) thrice by RBI since this June.
RBI MPC Meeting December 2022 Live Updates: Reserve Bank of India Governor Shaktikanta Das announced a 35 basis points (bps) hike in the repo rate during the bi-monthly monetary policy decision on Wednesday, December 7, at the culmination of the three-day Monetary Policy Committee (MPC) meeting. Reserve Bank of India's rate-setting panel had begun deliberations on Monday with regards to the next round of monetary policy.
RBI Monetary Policy and Rate Hike: Salient Points
*Repo rate by 35 basis points to 6.25%.
*Inflation is expected to be above 4% in the next 12 months.
*FY23 GDP growth forecast lowered to 6.8% from 7% earlier
*GDP growth forecast for October-December 2022 lowered to 4.4%.
*GDP growth forecast for January-March 2023 lowered to 4.2%.
*CPI inflation forecast for October-December 2022 raised to 6.6% from 6.5%
*CPI inflation forecast for January-March 2023 raised to 5.9% from 5.8%.
*CPI inflation forecast for April-June 2023 retained at 5.0%.
*CPI inflation is seen at 5.4% in July-September 2023
*FDI inflows rose to $22.7 billion in April to October 2022 from $21.3 billion in corresponding period last year
*Size of forex reserve has gone up from USD 524 billion (October 21) to USD 551.2 bn as of December 2
*Indian rupee has appreciated by 3.2% during April-October in real terms, while other major currencies have depreciated
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Here are all the LIVE UPDATES on RBI Monetary Policy Review MPC Meeting:-
Latest Updates
Regulator Walking Tightrope
“It is reassuring to see that the RBI is not letting its guard down despite an improvement in inflation numbers. We understand that the regulator is walking a tightrope between managing inflation and growth. This phase of rate hikes should end soon. As a business, we continue to see robust demand and foresee the momentum to continue on the back of higher digitisation and consumer awareness.”
Gaurav Chopra, Founder & CEO, IndiaLends
Good Policy May Give Confidence To Bond Market
We expect inflation to remain stubborn on the back of wage inflation and strengthening demand in the Indian economy. The focus on inflation control should eventually soothe bond markets as lower inflation in the medium term is good for bond holders.
Markets should also take relief from the tumbling crude oil prices in the international markets. Summarizing, the rate hike as per expectations, commentary hawkish which was not expected but is appropriate and overall, a good policy that should give confidence to bond markets in the long run.
Sandeep Bagla, CEO, Trust Mutual Fund
RBI's Fight Against Inflation Continues
Against the backdrop of geopolitical tensions, global uncertainty, and a slowdown in global growth, India growth story is a stand-out. Inflation continues to be sticky and further calibrated actions are likely by the central bank. Reigning-in inflation and bringing it below the top end of the band and then subsequently further down is RBI’s main focus.
Venkatraman Venkateswaran - Group President & Chief Financial Officer at Federal Bank
Further Hikes May Hurt Economy
While the hike was in line with market expectations, we believe that this will be the last for some time. Monetary policy decisions have a lagged impact on inflation and the impact of the recent hikes will only be visible by the middle of next year. We must pause at this juncture and wait for this impact to manifest and analyse it before we proceed any further. Further hikes may just hurt the economy without any associated benefits.
Rajiv Shastri, Director, and CEO, NJ AMC
35 Bps Hike Seems Best To Manage Inflation
Interest rates are bound to rise, and GDP growth rates will be lower. In such a scenario, a 35 bps hike in the policy repo rate seems to be the best bet to manage inflation without denting growth rates severely. The MPC’s initiatives on making UPI more well-rounded and complete will further strengthen India’s world-class digital payments ecosystem.
Murali Ramakrishnan, MD & CEO, South Indian Bank
RBI MPC Meeting Outcome LIVE: Shanti Ekambaram, Whole-time Director of Kotak Mahindra Bank Ltd, reacts
“As widely expected, the MPC decided to increase the Repo Rate by 35 bps, from 5.9% to 6.25%. The Governor emphasized that economic growth at 6.8% has been robust and amongst one of the best in the world. With a good monsoon, increase in manufacturing activity and robust services growth, economic growth outlook looks stable .Thus emphasis on inflation targeting and continuing stance of withdrawal of accommodation while being committed to ensuring adequate liquidity to support growth. While CPI has moderated, core inflation remains sticky and above the comfort zone of the Central Bank. Given the continued global headwinds we expect RBI to be nimble and take action wherever warranted.”
In-Line With Expectations
The RBI governor exhibited confidence in India's growth trajectory but mentioned that it is crucial to be vigilant to the secondary effects of high global commodities, especially energy and food prices.
We believe the MPC decisions today are on expected lines and would not have any major impact on Indian markets, purely based on decisions announced today.
Naveen Kulkarni , Chief Investment Officer, Axis Securities PMS
A Dovish Tilt
While the policy rate is in-line with expectations, overall, the tone and read of the policy is dovish. With the message that the first focus of the MPC is to bring down inflation below 6% and then towards a medium-term goal of 4 per cent, the guidance seems that RBI is now comfortable with the inflation trajectory and growth also needs attention.
Overall, policy has a dovish tilt and with the next policy after the budget, RBI will likely pause before ensuring that transmission of current policy rates is complete.
Anitha Rangan, Economist, Equirus
Further Tightening Likely
Overall, the policy seemed slightly hawkish on the margin and indicated that there may be space for further tightening, although it will depend on the inflation trajectory and the terminal rate for the US Federal Reserve.
RBI governor also mentioned that market participants must wean themselves away from the overhang of liquidity surpluses which means market should be prepared for further tighter liquidity condition.
Post the policy announcement bond yields hardened a bit. With corporate bonds spreads still being very tight, we may witness some increase going forward. We prefer the short-medium term part of the yield curve.
Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life Insurance
Moderation In Stance Expected
The markets were expecting a slight moderation in the stance, but it continues to be the withdrawal of the accommodative stance while supporting growth. This may be interpreted that further action on the rate front can still happen before arriving at the terminal rate.
Lowering the GDP forecast is predominantly factoring in the global headwinds which prevail and would likely impact India’s GDP growth. The inflation forecasts for the residual period of FY23 have been marginally increased from the previous forecast in view of the higher inflation level still prevailing.
The RBI Governor also gave caution to the market participants that this surplus liquidity should not be taken for granted hence the liquidity withdrawal will continue. Overall the tonality of the statement can be considered slightly hawkish in nature.
Ajit Banerjee, Chief Investment Officer, Shriram Life Insurance
A No-Surprise Event
This MPC announcement was considered a no-surprise event but the governor had other plans. The RBI sounded as firm as it was in the last meeting about their stance of still being focused on the withdrawal of accommodation.
We believe by maintaining its stance RBI has dodged being in a box and will have the liberty to look at future data points to navigate its future course of action. Going forward there could be a tug-of-war between declining inflation in India and rising interest rates by the US Fed – against this backdrop, it would be interesting to see how well the RBI would manage its repo rates.
- Apurva Sheth, Head of Market Perspectives, Samco Securities.
Rates May Not Go Much Higher From Here
Even though headline CPI is likely to fall below the MPC’s upper tolerance band of 6% over the next few months, we remain some distance away from the ultimate policy goal of 4% headline CPI. Hence, while policy rates in India may not go much higher from here, the bar for any possible policy pivot remains high. In this backdrop, we expect the 10-year G-Sec to trade in the range of 7.25-7.45% in the near term.
Churchil Bhatt, Executive Vice President & Debt Fund Manager, Kotak Mahindra Life Insurance
Home Loans To Rise
"As interest rates rise, the impact of monthly instalments for both new and existing customers will be felt. For instance, if the rate of interest is hiked by 0.35, then the EMI of a loan of Rs 10 lakh taken at 8.5% for ten years will increase by around Rs 300. To deal with the impact of a higher interest rate, it is important to maintain good credit, research the best rate offers, and consider refinancing existing loans to lower the monthly payments customers can also opt for long tenures or switch to a floating rate of interest."
- Atul Monga, Chief Executive and Founder of Basic Home Loan.
More Rate Hikes On Cards?
Given that RBI is emphasising containing inflation below the target rate and projections stating inflation to remain above 6% till March 2023, this implies that RBI will likely deliver a 25 bps hike in February 2023.
Terminal rate will be 6.5% as inflation is projected to average 5.2% in H2 FY24, implying no need for rate hikes at the April Policy meeting”
- Amar Ambani, Institutional Equities Head, YES Securities
'Main Hoon Na'
"The RBI has given a “Main Hoon Na” (we are there ) policy, reassuring the market. In a world where central banks are fighting to regain credibility, the RBI stands tall managing conflicting objectives of growth and inflation admirably. A data-driven RBI will keep on playing balls on merit and continue to keep the growth scoreboard moving with inflation under check.”
- Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company
RBI MPC Meeting Outcome LIVE: RBI MPC Meeting, Nifty Bank, Nifty Financial Service: Interest rate-sensitive sectors such as Bank and Financial Services appreciated the Reserve Bank of India’s decision to hike benchmark rates by 35 basis points or 6.25 per cent – the fifth straight rise since May 2022. Read More — RBI MPC Meeting: Rate sensitive sectors Nifty Bank and Financial Services appreciate – ICICI Bank, HDFC AMC surge
RBI MPC Meeting Outcome LIVE: Reserve Bank of India (RBI) governor Shaktikanta Das stated that the real GDP will be 7.1 per cent in the first quarter of the financial year 2023-24 and 5.9 per cent in the next quarter. But the GDP growth forecast for FY23 has been lowered to 6.8% from 7%. Read More — RBI MPC Meeting Outcome: GDP growth forecast for FY23 lowered to 6.8% from 7%, says Reserve Bank Governor Shaktikanta Das
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das on Wednesday said that the consumer price index (CPI) inflation for FY23 remains unchanged at 6.7 per cent. "Core inflation remains sticky and elevated. Risks to growth are evenly balanced, the outlook for imported inflation remains uncertain," RBI Governor Shaktikanta Das said. Read More — RBI Monetary Policy Review MPC Meeting: Central bank keeps CPI inflation forecast for FY23 unchanged at 6.7%
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das on Wednesday said that the consumer price index (CPI) inflation for FY23 remains unchanged at 6.7 per cent. "Core inflation remains sticky and elevated. Risks to growth are evenly balanced, the outlook for imported inflation remains uncertain," RBI Governor Shaktikanta Das said. Read More — RBI Monetary Policy Review MPC Meeting: Central bank keeps CPI inflation forecast for FY23 unchanged at 6.7%
RBI MPC Meeting Outcome LIVE: Madhavi Arora, lead economist at Emkay Global Financial Services, reacts to repo rate hike
"A 35bps hike today implies the ex-post real rates still sub 1% -- RBI's estimated real neutral rate, keeping 6-month ahead inflation as an anchor (a more certain trajectory vs one-year ahead), which may imply more space for another shallow hike of up to 25bps to reach a neutral rate (albeit not necessarily implying end of cycle).
At this point, we still think that the RBI would not turn too restrictive however, the extent of global disruption will remain key.
We are closely watching the global pace of inflation deceleration and how the impending recession will shape DM central bank policies, which could influence the RBI’s reaction function.
The still-fluid global situation might require frequent adjustments in macro and policy assessments ahead as far as terminal rates are concerned."
RBI MPC Meeting Outcome LIVE: Adhil Shetty, CEO, BankBazaar.com reacts to repo rate hike
RBI’s decision to increase the repo rate by 35 BPS to 6.25% is along expected lines. It’s the fifth hike this year, which tells you how stubborn the inflationary trends have been. But the view is that inflation, while remaining high, is moderating, and the rates are somewhere close to their peak. Global commodity prices and the domestic wholesale prices have come down from their peak earlier this year.All consumer loans have got costlier this year. Borrowers are under the pressure of mounting interest and rising EMIs. Deposit rates, which haven’t kept pace with the repo rate hikes, are now also spiking. As of December 2, 38 banks offered FD rates of 7.00% or more on select tenors.
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says the Indian rupee has appreciated by 3.2% during April-October in real terms, while other major currencies have depreciated.
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says the Indian rupee has appreciated by 3.2% during April-October in real terms, while other major currencies have depreciated.
RBI MPC Meeting Outcome LIVE: Current account deficit imminently manageable, says RBI Governor Shaktikanta Das
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says Reserve Bank would look at data and take policy action accordingly; liquidity condition likely to improve in coming months.
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says Reserve Bank will keep an Arjuna’s eye on inflation and will be ready to act. "Our actions will be nimble," he sums up.
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says battle against inflation yet not over as risks remain; RBI's action to remain nimble in best interest of economy.
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says Reserve Bank's surveys show consumer confidence has further improved. Manufacturing and infrastructure firms are optimistic about the outlook. Manufacturing, services PMI for India in November among the highest in the world.
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says despite marginal downward revision in GDP growth at 6.8%, India to remain fastest growing major economy.
RBI MPC Meeting Outcome LIVE: Standing Deposit Facility rate, Marginal Standing Facility rate also increased by 35 basis points (bps) each to 6% and 6.5%, respectively, says RBI Governor Shaktikanta Das
RBI Monetary Policy and Rate Hike: Salient Points
*CPI inflation forecast for October-December 2022 raised to 6.6% from 6.5%.
*CPI inflation forecast for January-March 2023 raised to 5.9% from 5.8%.
*CPI inflation forecast for April-June 2023 retained at 5.0%.
*CPI inflation is seen at 5.4% in July-September 2023RBI MPC Meeting Outcome LIVE: Non-food credit rose to Rs 10.6 lakh crore during April-November from Rs 1.9 lakh crore during same period last year, says RBI Governor Shaktikanta Das
RBI MPC Meeting Outcome LIVE: Agriculture sector remains resilient; Rabi sowing at 6.8% higher than normal, says RBI Governor Shaktikanta Das
RBI Monetary Policy and Rate Hike: Salient Points
*GDP growth forecast for October-December 2022 lowered to 4.4%.
*GDP growth forecast for January-March 2023 lowered to 4.2%.
*GDP growth forecast for FY23 lowered to 6.8% from 7%.RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says liquidity in the banking system remains in surplus
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says core inflation exhibiting stickiness; further caliberated monetary policy action needed.
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says Monetary Policy Committee's majority view was to withdraw accommodative stance
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says Reserve Bank of India's action in line with market expectations
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says Indian economy remains resilient as India is seen as a bright spot in a gloomy world.
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says FY23 GDP growth forecast lowered to 6.8% from 7% earlier
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says MPC panel voted with 5-1 majority in favour of 35 basis points repo rate hike.
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says global economy under midst of uncertainty; shortage of food and high fuel prices has affected poor most.
RBI MPC Meeting Outcome LIVE: RBI Governor Shaktikanta Das says Monetary Policy Committee meeting met on 5th,6th and 7th December. And based on an assessment of macroeconomic situation and its outlook, MPC decided by a majority of 5 members out of 6 to increase policy reported by 35 basis points to 6.25% with immediate effect.
RBI Monetary Policy and Rate Hike: RBI raises repo rate by 35 basis points to 6.25%
RBI MPC Meeting December 2022 Live Updates: RBI Governor Shaktikanta Das announces 35 bps hike in repo rate
RBI MPC Meeting December 2022 Live Updates: RBI Governor Shaktikanta Das says Indian economy remains resilient in hostile global environment
RBI MPC Meeting December 2022 Live Updates: RBI Governor Shaktikanta Das begins speech
RBI MPC Meeting December 2022 Live Updates: RBI Governor Shaktikanta Das' speech to begin at 10AM.
Shaktikanta Das Speech Live: Catch RBI Governor's Speech Live
Stock Markets Today Live Updates: Indian stock markets began trading on a cautious note ahead of the Reserve Bank of India (RBI) monetary policy announcements today at 10 am. The street will be keeping its eye on the interest rate along with Central Bank Governor Shaktikanta Das' commentary on inflation and growth. S&P BSE Sensex was trading at 62,574.43, down 51.93 points or 0.08 per cent while NSE Nifty was trading at 18,626.50, down by 16.25 points or 0.09 per cent.
RBI Monetary Policy and Rate Hike: According to Shishir Baijal, Chairman and Managing Director, Knight Frank India, out of 190 bps repo rate hike, 105 bps rise has already been transmitted in the marginal cost of funds based lending rate ( MCLR).
"The mortgage rates have increased in line with the MCLR and the cumulative growth in residential sales in the last six months have understandably begun showing some signs of slowing," Baijal said.
According to Baijal, the affordability of the home buyers has also reduced by 10 per cent since the beginning of this interest rate hike cycle.
Referring to the Q2 FY23 GDP print, Baijal said except for the service sector, a degrowth was seen in most of the core sectors such as industry, manufacturing and others.
"Hence, with inflation potentially showing signs of ebbing and growth concerns coming to the fore, we expect the RBI to hike its repo rate by a comparatively subdued 30-35 bps in the upcoming MPC meeting," he added.
RBI MPC Meeting December 2022 Live Updates: Recent Repo Rate trends
RBI MPC Meeting December 2022 Live Updates: Pankaj Pathak, Fund Manager - Fixed Income, Quantum Mutual Fund, said, "With a fall in commodity prices and some early signs of inflation coming down, the RBI may choose to slow down the pace of rate hikes. We expect the RBI to deliver a lower rate hike of 25 basis points in the upcoming meeting," .
Monetary policy often works with a long lag. The impact of past rate hikes and liquidity tightening measures is yet to be seen. Thus, there is a risk of over-tightening the monetary policy and hurting growth recovery at a nascent stage, Pathak added.
Expecting the RBI to be more data-dependent and reactive going forward than raising rates pre-emptively, Pathak also said there is a strong case for the former to take a pause and allow the past rate hikes to work through the real economy.
RBI MPC Meeting December 2022 Live Updates: Fitch Ratings' take
"The RBI has already intervened to support the rupee and further rate rises are likely to support the currency and to curtail underlying inflationary pressure. We now expect the RBI to increase policy rates to 6.15 per cent by December and to then hold this rate throughout 2023," Fitch said. The RBI's monetary policy committee is widely expected to raise the benchmark interest rates on December 7 from 5.90 per cent currently. (PTI)
RBI MPC Meeting December 2022 Live Updates: As per a report from State Bank of India (SBI), the RBI rate hike will be in smaller magnitude attuned to emerging market central banks and the overall rate setting tone.
"A 35-bps repo rate hike looks imminent. We believe at 6.25 per cent, it could be the terminal rate for now," the SBI said.
RBI MPC Meeting December 2022 Live Updates: Industry lobby body Assocham recently had made a request to RBI Governor Shaktikanta Das. At most, the new rate hike should not exceed the 25-35 bps band, Assocham said in a letter to Das. Several economists too have said the repo rate hike will be in the 25-35 bps band.
RBI MPC Meeting December 2022 Live Updates: Ahead of the outcome of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) meeting, industry players are voicing out for a moderation in interest rate hike.
RBI MPC Meeting December 2022 Live Updates: Will Shaktikanta Das led MPC raise repo rate in its December meeting? This video explains
RBI MPC Meeting December 2022 Live Updates: Reserve Bank of India's Monetary Policy Committee has hiked the interest rate in recent times by 190 basis points (bps) to contain the inflation.
RBI MPC Meeting December 2022 Live Updates: Watch out for the Monetary Policy statement of RBI Governor Shaktikanta Das at 10:00 am
RBI MPC Meeting December 2022 Live Updates: Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, opines: "Rupee continues to remain under pressure as the dollar strengthened against its major crosses. Strength in the dollar was one of the major factors that is triggering a move in the major crosses including the rupee. Focus will be on the RBI policy statement; expectation is that central bank could raise rates by another 35 bps. We expect the USD/INR (Spot) to trade sideways and quote in the range of 82.20 and 82.80."
RBI MPC Meeting December 2022 Live Updates: Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, opines: "Rupee continues to remain under pressure as the dollar strengthened against its major crosses. Strength in the dollar was one of the major factors that is triggering a move in the major crosses including the rupee. Focus will be on the RBI policy statement; expectation is that central bank could raise rates by another 35 bps. We expect the USD/INR (Spot) to trade sideways and quote in the range of 82.20 and 82.80."
RBI MPC Meeting December 2022 Live Updates: As per a poll by Zee Business, conducted among 15 economists, it was found that economists expect there will be an interest rate hike of 25-30 bps this time.
Read More — Economists expect a rate hike of 25-30bps — Check reasons | Zee Business Poll
RBI MPC Meeting December 2022 Live Updates: RBI Governor Shaktikanta Das would be announcing the bi-monthly monetary policy today at the conclusion of the three-day Monetary Policy Committee (MPC) meeting.
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