RBI MPC Live Updates: Repo Rate Remains Unchanged At 6.5%, Inflation Expected To Rise To 4.8%
Business News Live: Please follow this space for all the breaking news and latest updates from the stock market, economy, and corporate world
Ramani Sastri, Chairman and MD of Sterling Developers, said that the RBI has once again kept the repo rate unchanged, implying that there will be no immediate effect on home loan EMIs. “While the real estate sector has witnessed robust growth in recent years in the context of continuous demand, a rate cut would have given a golden opportunity to reinvigorate the real estate market with reduced interest rates ahead of the festive season, which is a crucial period for real estate sales,” Sastri said.
Adhil Shetty, CEO of BankBazaar.com, said, "Following the Reserve Bank of India's (RBI) monetary policy review, which concluded today, the committee has decided to keep the repo rate unchanged at 6.5% for the 10th consecutive time in a bid to control inflation. The central bank cited inflation numbers and geopolitical tensions as risks facing the economy's growth. However, in a departure from the previous few policy reviews, RBI has shifted its stance from being accommodative to neutral. Based on how the situation unfolds in the near future, this signals that the central bank is ready to go either way - if inflation stays low, we may see rate cuts in the future. However, at present, it is a wait-and-watch situation."
RBI Governor Shaktikanta Das said, "The global economy has remained resilient and is expected to maintain stable momentum over the rest of the year amidst downside risks from intensifying geopolitical conflicts. In India, real gross domestic product (GDP) registered a growth of 6.7 per cent in Q1:2024-25, driven by private consumption and investment."
The Reserve Bank of India (RBI) has maintained its real GDP growth forecast for India at 7.2 per cent for the fiscal year 2025, announced by Governor Shaktikanta Das.
RBI governor Shaktikanta Das said that the RBI is closely monitoring incoming data on credit cards, microfinance institution (MFI) loans, and unsecured loans. He stressed that banks and non-banking financial companies (NBFCs) must pay continued attention to issues such as inoperative accounts, mule accounts, and the cybersecurity landscape, among other factors. While NBFCs have experienced impressive growth in recent years, some are expanding aggressively without establishing robust underwriting practices. In some instances, retail targets are driving growth rather than actual demand. Although self-correction by NBFCs is the preferred approach, the RBI is vigilant and ready to take action if necessary.
RBI governor Shakti Kanta Das said the transaction limit will be raised from Rs 5,000 to Rs 10,000 to encourage wider adoption of the Unified Payments Interface (UPI). This increase aims to facilitate larger transactions and enhance users' accessibility and convenience of the digital payment system. In addition, the UPI Lite wallet limit has been raised from Rs 2,000 to Rs 5,000.
RBI Governor Das said that the transmission to the credit market has been satisfactory, and the exchange rate of the Indian rupee has remained stable and range-bound relative to other emerging market currencies. Throughout the current financial year, the Indian rupee has largely maintained this stability and has been one of the least volatile currencies in the market.
Governor Das noted during the MPC announcement that food inflation pressures could ease, thanks to favourable conditions from kharif sowing and adequate soil moisture. He also indicated that core inflation seems to have reached its lowest point.
RBI Governor Shaktikanta Das indicated that inflation is expected to rise to 4.8 per cent in the fiscal third quarter. For FY25, the overall inflation rate is projected at 4.5 per cent, with estimates of 4.8 per cent for Q3, 4.2 per cent for Q4, and 4.3 per cent for Q1 FY26.
The RBI governor said that output from the eight core industries declined by 1.8 per cent in Q1, although government consumption is showing signs of improvement. However, excessive rainfall negatively impacted several sectors, particularly electricity, coal, and cement.
RBI Governor Shaktikanta Das announced the growth estimates for FY25, projecting an overall growth rate of 7.2 per cent. For the fiscal year, the estimates are as follows: 7.3 per cent for Q1, 7.0 per cent for Q2, 7.4 per cent for both Q3 and Q4 for FY26.
During the monetary policy announcement, RBI Governor Shaktikanta Das said moderation in inflation remains slow and uneven.
The Reserve Bank of India (RBI) decided to keep the benchmark interest rate steady at 6.5 per cent on Wednesday, marking the tenth consecutive meeting without any changes to the rate. After assessing the macroeconomic conditions and future outlook, the Monetary Policy Committee (MPC) voted to keep the policy rate at 6.5 per cent, with 5 out of 6 members in favour, Governor Shaktikanta Das announced.
RBI Governor Shaktikanta Das, who chairs the Monetary Policy Committee (MPC), is set to announce the outcomes of the three-day discussions by 10 am. People can watch him announce the repo rate decision live on RBI's YouTube channel and their X (formerly Twitter) page. ABP Live will also provide live updates from the press conference, along with insights on the implications for various sectors and the overall Indian economy.
Emkay Global Financial Services suggests that a shift in stance during the upcoming meeting is possible, which could be interpreted by the market as a signal to create room for future rate cuts. However, the RBI is likely to emphasise its commitment to being "actively disinflationary" and will adopt a wait-and-watch approach to evaluate various macroeconomic factors.
Ahead of RBI MPC announcements, Indian benchmark indices opened higher on Wednesday, with Nifty nearing 25,000. The Sensex rose by 137.02 points, or 0.17 per cent, to reach 81,771.83, while the Nifty increased by 43.60 points, or 0.17 per cent, to stand at 25,056.80. Advancements were seen in 2,046 shares, 498 shares declined, and 89 remained unchanged.
“We anticipate that the MPC will maintain the current policy rate and stance. The commentaries from the newly inducted external members will be closely monitored to gauge future policy directions. Overall, we expect the governor to have a dovish tone, laying the groundwork for a shallow rate cut in the coming months,” said CareEdge Rating in its report.
The overall outlook for economic growth remains robust. A resurgence in private consumption demand, coupled with early indicators of increased private investment, is promising for the economy as a whole.
Dhiraj Relli, MD and CEO of HDFC Securities stated that while they do not anticipate the RBI to initiate a rate cut cycle, a shift to a neutral stance remains a possibility. “The MPC may keep the repo rates steady at 6.50 per cent for the 10th consecutive time. Although it remains a close call, the RBI could very well deliver a no-change policy while only changing its tone towards the dovish side,” said Relli.
Ayush Lohia, CEO of Lohia, a manufacturer of electric three-wheelers (E3Ws), stressed the importance of ongoing policy support to fuel growth in the EV sector. "I strongly urge access to low-interest loans or debt financing options to facilitate the adoption of E3Ws among consumers and fleet operators also we are looking for tax benefits or exemptions to make E3Ws more affordable for consumers and profitable for manufacturers," he said.
Dhruv Agarwala, Group CEO of Housing.com, anticipates that the RBI will maintain the current repo rate. "Although inflation is largely aligned with the RBI’s 4 per cent target, estimates for September's CPI stand at 5.2 per cent, a significant rise from August's 3.7 per cent," he said.
He mentioned that although a combination of slowing growth and decreasing inflation might open the door for a rate cut as early as December, prospective homebuyers in India may need to exercise patience before experiencing any further relief in borrowing costs.
"We expect the RBI to keep the policy repo rate (currently at 6.50 per cent) and stance (withdrawal of accommodation) unchanged in the upcoming October monetary policy meeting, though we feel strongly that the stance should be changed to neutral, considering the change in global rates cycle and potential risks to India's growth momentum going forward," said Kaushik Das, chief economist, India & South Asia, Deutsche Bank.
Background
Business News Live: Hello and welcome to ABP Live's Business LIVE blog. Please follow this space for all the breaking news and latest updates from the stock market, economy, and the corporate world.
The Reserve Bank of India (RBI) will announce the results of its Monetary Policy Committee (MPC) meeting on Wednesday. The MPC will convene to decide on the benchmark interest rate and discuss the future direction of the Indian economy. This bi-monthly meeting, chaired by RBI Governor Shaktikanta Das, was scheduled for October 7-9, 2024. The central bank last raised the repo rate in February 2023 and has kept key rates unchanged since then.
The outcome will be announced on Wednesday at approximately 10 AM. Visit the Reserve Bank of India's official website for press releases, meeting minutes, and related documents. Major updates will also be shared on the RBI's social media accounts on X and LinkedIn.
In the previous MPC meeting, held from August 6-8, the committee decided to maintain the benchmark interest rate at 6.5 per cent. This marked the ninth consecutive meeting where key rates remained unchanged. Experts suggest that the committee is expected to keep the repo rates the same this year as well.
Gaurav Goel, Entrepreneur SEBI registered Investment Advisor, said, "MPC has contradictory positions yet again to deal with respect to inflation and growth. We expect MPC to keep the repo rate unchanged at 6.5 per cent as has done in its last nine previous meeting. However, we do expect it to change the stance from “withdrawal of accommodation” to “neutral” and prepare a platform for rate cuts in their next MPC meetings in December 2024 and Feb 2025. We expect RBI to keep a hawk eye on emerging date particularly on inflation going forward and be nimble with policy making.”
"We do not expect any change in the repo rate or stance by MPC. The reason is that inflation for September and October will be above 5 per cent, and the present low inflation is due to the base effect. Besides, core inflation is inching upwards," said Madan Sabnavis, Chief Economist, Bank of Baroda.
- - - - - - - - - Advertisement - - - - - - - - -