RBI press confrence :Rbi keeps reverse repo rate unchanged at 4%
The monetary policy committee (MPC ) on Friday in the meeting has decided to integrate three existing ombudsman schemes and provide a centralised scheme Integrated ombudsman scheme to be rolled out by June 2021
Central government and RBI have taken several steps to encourage retail investment in government securities Proposed to provide retail investors access to government bond market, both primary and secondary, directly through the RBI Retail investors will now have direct access to participate in the G-Sec market.
Funds from banks under TLTRO on tap scheme to be provided to NBFCs for lending in specific stressed sectors On a review of monetary and liquidity conditions it has been decided to restore CRR in two phases CRR to be raised to 3.5% from Mar 27 and 4.0% from May 22 MSF relief facility for banks to be available for another 6 months till September MSF relief provides increased access to funds to the extent of Rs 1.53 lakh crore To extend dispensation of enhanced HTM of 22% up to March 31, 2023 To include securities acquired between Apr 1, 2021 and Mar 31, 2022 in HTM dispensation The HTM limits will be restored to 19.5% in a phased manner starting from Apr-Jun 2023 To defer implementation of last tranche of capital conservation buffer of 0.625% and also defer implementation of the net stable funding ratio by another 6 months to October 2021 To permit resident individuals to make remittances to IFSCs for investment in securities for investment in instruments issued by non-resident entities in IFSCs
Large government borrowing programme was managed seamlessly during April to December. Explicit forward guidance was an innovative feature in monetary policy. Maintenance of financial stability and orderly evolution of yield curve were explicitly regarded as public goods Convinced by RBI's communications and actions market players reacted synchronously On Jan. 11 money market rates firmed up on perceived misconception of RBI reversing accommodative money market stance The stance of liquidity management continues to be accommodative and completely in consonance with the stance of monetary policy Reserve money rose by 14.5% year on year on Jan. 29 led by currency demand; Money supply grew by 12.5% on Jan. 15
A two-phase normalization of the CRR needs to be seen in current context CRR normalization opens up space for a variety of market options to inject additional liquidity Gross market borrowing of Centre is estimated at Rs 12 lakh crore Look forward to common understanding and cooperative approach between market participants and RBI in 2021-22
After breaching upper tolerance threshold continuously, CPI inflation moved below 6% for first time in the post lockdown period, in December. Vegetable prices decline accounted for 90% of decline in headline inflation in November, December It is expected that vegetable prices will continue to remain soft in near term Petroleum product prices have reached historic highs on account recent surge in crude prices . “Going forward, concerted policy action by both Centre and State is crucial to ensure ongoing cost build-up doesn’t accelerate,” Das said. RBI projects CPI inflation at 5.2% in Q4 FY21
2021 is setting the stage for a new economic era in the course of our history Signs of recovery have strengthened further since last MPC meeting High frequency indicators show that list of recovering sectors is increasing Consumer confidence is reviving Data for sales and new launches of residential projects reflect renewed confidence in real estate sector
Vaccination drive is expected to provide impetus for restoration of contact-led services Ahead of a broader infra revival, speed of construction of highways is improving FDI and FPI has surges in recent months. Union Budget announcements to have a cascading multiplier effect.
GDP growth projected in 10.5% in FY22, says Governor Das
The Monetary Policy Committee has unanimously decided to keep the key repo rate and the reverse repo rate unchanged at 4% and 3.35% respectively, while continuing the accomadative stance for “as long as necessary”, Das said. For the first time since onset of Covid-19, inflation eased below 6% Preliminary estimates of GDP has turned out to be very close to MPC's December projection
Retail inflation fell sharply in December, led by a crash in vegetable prices. With the drop, inflation fell back within the MPC’s target range of 4 (+/-2)% for the first time since March 2020. Inflation in December was at its lowest in 15 months, while inflation in food and beverages dropped to 16-month low of 3.87% in December. This may provide some comfort to the MPC but not everyone believes it will be enough to seal a rate cut call.
As fiscal policy picks up the baton of reviving the economy and sustaining growth, monetary policy may need to pick between being complementary or a substitute so that “all guns are not blazing at the same time”, Sajjid Chinoy, chief India economist said.