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RBI Monetary Policy Live Updates: Governor Shaktikanta Das hikes repo rate by 50 bps, lowers GDP forecast.

RBI Monetary Policy Live Updates: The decision of RBI Governor Shaktikanta Das headed six-member MPC has been announced today

RBI Policy September 2022 Live Updates: The decision of RBI Governor Shaktikanta Das headed six-member Monetary Policy Committee (MPC) has been announced on Friday. The Reserve Bank of India (RBI) has hiked the repo rate by 50 basis points to 5.90%, the fourth straight increase in the current cycle, to tame sustained above-target retail inflation rate.

RBI had slashed the repo rate in March, 2020 with an aim to cushion the impact of covid-induced lockdown, and maintained status-quo in the benchmark interest rate for almost two years before increasing it on May 4, 2022. The RBI has now raised rates by a total 190 basis points since its first unscheduled mid-meeting hike in May.

Repo rate hike in-line with expectations

“Repo policy rate hike of 50 bps is in line with our expectations. Given the global adverse conditions we remain wary on the pressure on INR and hence the need for continued rate hikes. We expect the MPC to hike 35bps in the December policy. However, with inflation expected to fall within 6% threshold in 4QFY23, we expect the MPC to probably pause and assess the lagged impact of monetary tightening,”.

‘RBI’s positive commentary market positive’

“The RBI governor’s comments today is a reaffirmation of this ‘India resilient’ theme. It was this positive commentary on India’s growth impulses and projection of 7% GDP growth with 6.7% inflation for FY 23 that has come as a positive even while the policy announcements relating to rates were on totally expected lines. The Governor’s confident statement that CAD can be financed comfortably even with crude at $100 for the rest of the year is reassuring. In brief the positive commentary is market positive,”.

Bank stocks gain;;;;;;;Banking stocks gain on RBI policy announcement, Nifty Bank rises more than a per cent after the central bank hiked repo rate by 50 bps on Friday

‘Economic activity remains resilient’

High frequency data for the second quarter indicate that economic activity remains resilient, private consumption has been holding up. Rural demand is also gaining gradually, investment demand picking up, agriculture sector remains resilient: Shaktikanta Das

RBI Governor on rupee depreciation

Rupee movement against US dollar; depreciated only 7.4% this year till September 28, and has fared better than many other currencies. RBI does not have a fixed exchange rate for rupee; intervenes in market to curb excessive volatility and RBI forex reserves “umbrella” remains strong, said Das 

Inflation forecast unchanged

RBI has maintained consumer price index (CPI) inflation forecast for FY23 at 6.7%

GDP growth forecast

The RBI has lowered the real gross domestic product (GDP) growth forecast for FY23 to 7% from 7.2%, said Governor Das

Das on global economy

“We are faced with another storm of aggressive monetary tightening globally. The global economy is in the eye of a new storm,” said Das in a virtual briefing, adding the move is causing volatility and risk aversion in the financial markets. 

Rupee opening

Rupee rises to 81.59 against US dollar in early trade on Friday as against Thursday’s close of 81.86 per dollar ahead of the RBI policy

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