RBI MPC Live Updates: Governor Das To Announce Interest Rate Decision Today

India gears up for the much-awaited key interest rate decision by the Reserve Bank of India’s Monetary Policy Committee on Friday, as pressures build upon the central bank to ease liquidity to revive growth.

Of the 25 economists polled by Bloomberg, 21 expect the MPC to maintain the status quo for the eleventh straight meeting. The benchmark lending rate, or the repo rate, is expected to remain unchanged at 6.5%.

Pressure is mounting on the Reserve Bank of India to announce liquidity injections and keep local borrowing costs anchored, after a shocking slowdown in last quarter’s economic growth. 

Economists expect easier liquidity conditions and a possible cut in cash reserve ratio by the RBI, which has already sent the benchmark 10-year bond yield to near three-year low.

The six-member Monetary Policy Committee, headed by RBI Governor Shaktikanta Das, started its meeting to decide on the next set of bi-monthly monetary policy on Dec. 4.

It last hiked the repo rate to 6.5% in February 2023 and since then it has held the rate at the same level.

RBI MPC Live Updates: Growth Slows To Seven-Quarter Low

Gross Domestic Product grew 5.4% in the second quarter—slowest in nearly two years—led by slower growth across the industrial sector and compared to 6.7% in the April-June quarter.

Gross Value Added, which strips out indirect tax and subsidies, is estimated to have grown 5.6%, compared to 6.8% in the preceding quarter.

Alongside slower growth in industrial GVA led by manufacturing, private consumption, capex saw slower growth compared to the first quarter, as per expenditure wise trends.

The lower-than-estimated GDP growth prompted economists across the board to lower GDP forecasts for the full year, despite expectations of a sequential uptick in the second half of the fiscal. The RBI, too, is expected to lower its GDP growth forecast of 7.2% for the full fiscal.

RBI MPC Live Updates: Retail Inflation At 14-Month High In October 

CPI inflation breaching the upper limit of RBI’s tolerance band in October is not a favourable backdrop for the MPC to commence the easing cycle, even as the growth outcome in Q2 FY25 disappointed MPC’s expectation, Barclays said.

“That said, we do not think the MPC’s decision will be unanimous, and think it is likely that more than one member may dissent in the meeting.”

High-frequency indicators for food prices show softer momentum almost across the board for nonperishables in November, though vegetable prices show only limited softening.

At the upcoming meet, the RBI could raise the third quarter inflation forecast upwards by about 80-100 basis points, but also trim fiscal 2025 GDP growth forecast by about 70 basis points.

RBI MPC Live Updates: Central Bank To Surprise With 25 Bps Cut, Says Nomura

Nomura expects the Reserve Bank of India to announce a 25 basis point repo rate cut in its Dec. 6 Monetary Policy Committee meeting decision announcement, as per its latest report. If the forecast holds true, this would bring the benchmark repo rate down to 6.25%.

While 42 of 49 economists surveyed by Bloomberg anticipate no change, Nomura assigns a 75% probability to its prediction, underscoring its confidence in a pivot towards rate easing. The brokerage further expects100 bps in total cuts by mid-2025, bringing the repo rate to 5.50%.

Nomura cited a sharp slowdown in India’s GDP growth and subdued forward inflation outlook as key drivers for the expected cut. This fiscal’s second quarter GDP growth slumped to 5.4% year-on-year, down from 6.7% in the first quarter, pointing to a significant decline in private demand.

RBI MPC Live Updates: Rupee Opens Stronger Ahead Of Interest Rate Decision

The India Rupee opened stronger ahead of the Reserve Bank of India’s monetary policy decision that will be announced shortly by Governor Shaktikanta Das.

The domestic currency strengthened 7 paise to 84.66 against the dollar, according to Bloomberg data. The rupee closed at 84.73 against the greenback on Thursday.

Of the 25 economists polled by Bloomberg, 21 expect the MPC to maintain the status quo for the eleventh straight meeting. The benchmark lending rate, or the repo rate, is expected to remain unchanged at 6.5%.

The Rupee could gain support from the RBI’s efforts to manage liquidity in the banking system, according to Amit Pabari, managing director, CR Forex Advisors. “We anticipate the Rupee’s downside to remain capped at 85, with the USDINR pair expected to trade within the range of 84.50 to 85 in the short term.”

The Indian rupee is expected to open a tad stronger after the Central Bank sold dollars at 84.75 levels and ensured it stayed in the range of 84.70 to 84.75, Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said. “As the RBI announces policy rates amidst acweaker currency and stronger markets the range for rupee is expected between 84.60-84.80.”

The dollar index—which tracks the greenback’s performance against a basket of 10 leading global currencies—was trading 0.07% higher at 105.78.

International benchmark Brent oil was priced 0.15% down at $71.98 per barrel after US imposed more sanctions on Iranian crude. West Texas Intermediate was up 0.09% higher at $68.24 a barrel.

RBI MPC Live Updates: Yield On The 10-Year Bond Opens Flat

  • The yield on the 10-year bond opened flat at 6.68%.

  • It closed at 6.68% on Thursday.

Source: Bloomberg

RBI MPC Live Updates: Markets To See CRR Cut Definitely, Says JPMorgan’s Jahangir Aziz

India will most likely see a rate cut but will “definitely” see a cut in the cash reserve ratio, according to Jahangir Aziz, Head-Emerging Market Economics at JPMorgan.

Consumption is growing on significant income transferred promised by state governments, he told NDTV Profit in an interview. “Consumption isn’t weak in India, real income is weak.”

India’s central bank will do what is important for India, not necessarily follow US Fed he said adding that almost all central banks who’ve met in the last two to three weeks have cut rates.

Cutting rates right now could spike inflation while RBI is struggling to stabilize exchange rate, he said. A lot of liquidity has been taken out of the markets, he added.

Cash Reserve Ratio is the specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank.

RBI MPC Live Updates: Nifty, Sensex Open Slightly Higher Ahead Of Policy Decision

The NSE Nifty 50 and BSE Sensex opened with marginal gains on Friday as ICICI Bank Ltd. and Trent Ltd. share prices led.

Market participants exercised caution before the outcome of the Reserve Bank of India’s Monetary Policy Committee policy decision.

As of 09:18 a.m., the Nifty 50 was trading 11.35 points or 0.05% down at 24,697.05, and the Sensex was trading flat at 81,752.29.

“On the global front, markets traded with mixed sentiment, while buying activity from FIIs suggests a positive momentum for the domestic market in the coming sessions,” said Hardik Matalia, research analyst, Choice Broking

RBI MPC Live Updates: Bond Yields Near Three-Year Low On Likely Liquidity Boost

The yield on India’s benchmark 10-year bond is on track to hit a three-year low in hopes of a liquidity boost via a quasi-rate cut in the upcoming monetary policy meet outcome, as economic woes deepen.

The yield on the 10-year bond opened flat after closing at 6.68% in the previous session. The yields have been on a decline throughout the year, and are nearing the nearly three-year low of 6.66%, previously seen in February 2022.

Since the latest GDP data was announced, the yields on the short-term two-year paper slipped by 2 basis points to 6.6%, while the long-term security fell by 5 basis points to 6.81 on Thursday.

Bond yields usually move in the direction of the policy rate as more liquidity makes bonds more attractive to investors.  

The Reserve Bank of India’s monetary policy committee will meet from Wednesday to Friday to decide on the key policy rates after the country’s economic growth fell to the slowest in nearly two years.

RBI MPC Live Updates: Rate Cuts Likely To Start In February, Say Brokerages

The Reserve Bank of India is seen holding its repo rate for the eleventh straight meeting in December and brokerages do not expect a rate cut until February. However, they expect the regulator bank to act towards liquidity easing through unconventional policy tools.

BofA’s report said that despite seeing a very weak GDP growth print, the RBI appears set to be on hold, but the MPC decision could be more contested than previous meetings, with more than one members voting for a rate cut.

Emkay Research said the massive GDP undershoot has meant that the policy trade-offs have become even more acute as the economy looks to be in a stagflationary state.

The brokerage also expects a CRR reversal to pre-Covid 4% level, implying an infusion of Rs 1.2 lakh crore at a time when core liquidity may steadily move to a deficit ahead with unsterilised forex intervention and CIC leakages.

Read more here.

MPC Live Updates: Governor Das Arrives At RBI Headquarters 

Reserve Bank of India’s Governor Shaktikanta Das arrived at the headquarters ahead of the MPC decision. Of the 25 economists polled by Bloomberg, 21 expect the MPC to maintain the status quo for the eleventh straight meeting. The benchmark lending rate, or the repo rate, is expected to remain unchanged at 6.5%.

The six-member Monetary Policy Committee, headed by RBI Governor Shaktikanta Das, started its meeting to decide on the next set of bi-monthly monetary policy on Dec. 4.

Watch RBI MPC Decision Live Here

The Reserve Bank of India’s Governor Shaktikanta Das will shortly announce the key rate decision after a muted second-quarter economic growth, prompting a boost in liquidity.

The six-member Monetary Policy Committee is anticipated to maintain the repo rate at 6.5%, however, a cut in CRR is anticipated by economists.

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RBI Live Updates: Price Stability Is Of Paramount Importance, Says Das  

Monetary policy is important as it affects every segment of economy and MPC’s effort is to follow a flexible inflation target framework, says Governor Shaktikanta Das.

Governor says:

  • Monetary policy affects vegetable vendors, the middle class, big corporates.

  • MPC effort is to follow a flexible inflation target framework.

  • India has been growing at more than 8%.

  • It is always the effort of RBI, and MPC to follow the provision of law in letter and spirit.

  • Price stability is of paramount importance.

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