RBI MPC Highlights: Sensex, Nifty Close In Red As RBI Keep Repo Rate Unchanged At 6.5%
Business News Highlights: Please follow this space for all the breaking news and latest updates from the stock market, economy, and corporate world
LIVE
Background
Business News Highlights: 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) is set to announce the results of its Monetary Policy Committee (MPC) meeting on Friday. The MPC will convene to assess the benchmark interest rate and discuss the future economic direction for India. The meeting, chaired by RBI Governor Shaktikanta Das, was originally scheduled for December 4-6, 2024. The central bank last raised the repo rate in February 2023 and has maintained the key rates unchanged since then.
The MPC's decision will be announced at approximately 10 am on Friday. For official updates, including press releases, meeting minutes, and related documents, visit the RBI's official website. Key announcements will also be shared on the RBI's social media platforms, including X and LinkedIn.
In the last MPC meeting, held from October 7-9, the committee decided to keep the benchmark interest rate at 6.5 per cent, marking the tenth consecutive meeting with no change in rates. Experts anticipate that the RBI will maintain the same stance on rates in this upcoming meeting as well.
However, Nomura predicts a 25 basis point repo rate cut by the RBI in this Monetary Policy Committee meeting, as outlined in its latest report. If correct, this would lower the benchmark repo rate to 6.25 per cent.
While 42 out of 49 economists surveyed by Bloomberg anticipate no change, Nomura assigns a 75 per cent probability to its forecast, reflecting strong confidence in a move toward rate easing. Additionally, the brokerage expects a total of 100 basis points in rate cuts by mid-2025, which would bring the repo rate down to 5.50 per cent.
Nomura's expectation of a rate cut is driven by a significant slowdown in India’s GDP growth and a subdued inflation outlook. The country’s GDP growth for the second quarter of this fiscal year dropped to 5.4 per cent year-on-year, down from 6.7 per cent in the first quarter, indicating a notable decline in private demand.
Persisting Headline Inflation Are Concerning Factors: Expert
Parijat Agrawal, Head of Fixed Income at Union Asset Management, said that the Monetary Policy Committee’s decision to keep the Repo Rate steady while reducing the Cash Reserve Ratio (CRR) by 50 basis points to ease tight liquidity conditions was in accordance with our expectations. “The moderation in growth and the persistence of headline inflation are concerning factors that may necessitate timely policy support,” he added.
The Unchanged Repo Rate Demonstrates A Nuanced Approach: Expert
Pankaj Sharma, CEO of Religare Finvest, said, "The RBI stance of maintaining the repo rate at 6.50 per cent demonstrates a nuanced approach to our current economic challenges. While we would have welcomed a rate cut, we understand the delicate balancing act of managing inflation against economic growth and recognise the RBI's cautious approach."
"The current economic indicators present a complex landscape. With inflation rates climbing to 6.2 per cent - significantly above the RBI's 4 per cent target - and our GDP growth decelerating to 5.4 per cent in the second quarter, we're navigating turbulent economic waters," he added.
Sensex, Nifty Close In Red Amid RBI MPC Announcements
Indian benchmark indices ended the volatile session on Friday with slight losses, as the Nifty closed just below 24,700. The RBI's decision to keep the repo rate unchanged and reduce the CRR to enhance liquidity aligned with expectations. At the close, the Sensex was down 56.74 points, or 0.07 per cent, at 81,709.12, while the Nifty declined by 30.60 points, or 0.12 per cent, to finish at 24,677.80.
Cut In CRR By The RBI Will Shore Up The Liquidity: PropEquity's CEO
“In order to achieve a $1 trillion real estate economy, radical reforms on the fiscal and monetary fronts must be initiated, including making home loans both accessible and affordable in order to tap into the huge housing demand and thereby unleash the full potential of the Indian economy,” said Samir Jasuja, Founder and CEO, PropEquity.
"The cut in CRR by the RBI today will shore up the liquidity in the economy and help developers borrow more as there is an unlimited requirement for fund in this sector. However, a cut in repo rate would have given a fillip to consumption and helped boost housing demand," he added.
RBI May Cut Over 50 Bps In The Coming Months: Expert
Murthy Nagarajan, Head-Fixed Income, Tata Asset Management, said, “Debt market has taken no rate cut or change in stance as negative and 10 year yields have moved up from 7.72 to 7.75 levels. The market is expected to stabilise in the next few days as traders' positions get offloaded. Till that time, the ten year is expected to trade in the range of 6.72 to 6.78 levels. RBI may have to cut more than 50 basis points in the coming months as the rate cut cycle is getting delayed and GDP growth in trending towards 6 per cent levels. Investors should add to their duration portfolio to take advantage of high accrual and expected price appreciation in the coming months.”
Trending News
Top Headlines
