RBI left rates unchanged and stance accommodative. Growth forecast for 2020-21 fiscal has been downgraded to 6% from 6.5%. First half may witness growth of 5-5.5%, Q3 will see growth climbing to 6.2%. Inflation forecast has been revised upwards to 5-5.4% in H1 20-21. Q3 20-21 inflation may trend down to 3.2%. Higher onion prices have contributed to 2% in headline inflation and 3.8% in Food inflation.
Major steps: Incremental loans by banks from Jan 31 st till July end to Auto, Commercial housing and MSME’S will be exempted from CRR
-Extension in date of commencement of real estate projects for genuine reasons will not be downgraded for asset classification.
-RBI will conduct 1-3 year repo rate operations to infuse liquidity and ensure that G-SEC rates are contained so that benchmarked loan rates will be maintained.
RBI Governor said that MCLR- Credit market rate transmission has been 55 bps as against 135 bps rate cut by RBI. In longer term rates, transmission has been 75 bps. In G-SEC, transmission has been 175-195 bps.
FX reserves swelled to USD 471 bn as on Feb 4 th as against USD 418 bn last March.
NIFTY is up 0.48%, USD/INR is at 71.26, 10 YEAR Yield is at 6.49%.