RBI MPC Meeting Highlights: ‘Stubborn’ Inflation Stops MPC To Change Repo Rate From 6.5% – News18

RBI MPC LIVE Updates: ‘Repo Rate Unchanged on Expected Lines’

RBI’s decision to maintain the status quo on key policy rate was on expected lines, experts said on Thursday.

Bandhan Bank Chief Economist and Head of Research Siddhartha Sanyal said the status quo on the key (repo) rate is not a surprise.

The central bank was emphatic to underscore the commitment to further disinflation and is in no hurry to cut rates, he said.

While the RBI closely watches the heightened volatility in financial markets globally, it has rightly avoided a knee-jerk reaction, Sanyal said.

Equirus Securities economist Anitha Rangan said the decision to keep the rate unchanged was taken given the domestic inflation led by the food side.

“RBI is not going to ignore food inflation. According to the central bank, the pace of inflation is moderating but the moderation is uneven and slow. Therefore patience is required,” she said.

RBI MPC LIVE Updates: RBI’s Stance Provides Elbow Room to Check Inflation

The Reserve Bank’s decision to keep interest rate unchanged will provide it an elbow room to continue focus on moderating inflation for resilient and sustained economic growth, said industry experts.

For the ninth time in a row, the central bank decided to continue the status quo and kept the benchmark repo rate at 6.5 per cent.

RBI MPC LIVE Updates

Nitin Bavisi, CFO, Ajmera Realty & Infra India, said, “The unchanged MPC rate for the 9th consecutive time is a strategic stance by the RBI to maintain a sustained economic growth and keep a rigorous check on the inflation rate.”

The real GDP growth projection at 7.2% underlines the Indian economy moving up the trajectory at a gradual but steady pace. Given the economic volatility at the global level, this is an enduring demonstration by the RBI to be cautious of the economic turbulences while ensuring the domestic economy scales new heights.

The pause in repo rate along with the proposition for fast-paced clearance of cheques within a few hours are moves that will be well revered by the real estate sector. This will enable faster transactions between developers and homebuyers and will address a major change in the Indian banking system.

Overall, riding the tide of strong domestic economic growth, the pause in repo rate will continue to fuel liquidity in the hands of the masses and encourage them to make investments. With real estate emerging as one of the most sought-after asset classes, these developments can be perceived as game-changers in the long run.”

RBI MPC LIVE Updates: Stability in Mortgage Rate to Help Maintain Strong Housing Demand

The housing market will continue to see strong demand in the coming months as mortgage rates are likely to remain stable following the RBI move to keep the repo rate unchanged, according to real estate developers.

RBI MPC LIVE Updates:

Dilip Modi, Founder & CEO of Spice Money, said: “At Spice Money, we are excited about the proposal to introduce ‘Delegated Payments’ in UPI. This innovative feature, which allows a primary user to authorize another individual, such as a family member, to make UPI transactions from their bank account up to a specified limit will significantly enhance the convenience and inclusivity of digital payments. Importantly, the secondary user will not need to have a separate bank account linked to UPI, simplifying the process and enhancing ease of use.

The potential impact of this development is particularly significant for rural communities where access to banking facilities can be limited. Families often share financial responsibilities, and this new feature will help them manage their finances more efficiently. For instance, a primary user can allow a family member to make necessary transactions without the need for additional banking accounts or complex procedures. This not only simplifies the process but also ensures that more people can participate in the digital economy.

By enabling more individuals to utilize digital payments, we are taking a crucial step toward deepening the reach and usage of digital payments across the country. At Spice Money, we remain committed to driving financial inclusion and ensuring that every individual, no matter where they are, can benefit from the convenience and security of digital payments”

RBI MPC LIVE Updates: Sensex Slides 582 Points; Nifty Below 24,200

Equity benchmark indices, the BSE Sensex and NSE Nifty50, settled in negative territory on Thursday after the Reserve Bank of India’s Monetary Policy Committee (MPC), led by Governor Shaktikanta Das, decided to keep the repo rate unchanged at 6.5 per cent for the ninth consecutive time.

Equity benchmark indices, the BSE Sensex and NSE Nifty50, settled in negative territory on Thursday after the Reserve Bank of India’s Monetary Policy Committee (MPC), led by Governor Shaktikanta Das, decided to keep the repo rate unchanged at 6.5 per cent for the ninth consecutive time.

The BSE Sensex shed 581.79 points, or 0.73 per cent, to 78,886.22, while the NSE Nifty50 fell 180.50 points, or 0.74 per cent, to 24,117.

The day ended in favor of the bears as 39 out of 50 constituent stocks of the Nifty50 ended lower, with LTIMindtree, Grasim, Asian Paints, Apollo Hospitals, and Infosys being the top laggards, losing up to 4.9 per cent.

RBI MPC LIVE Updates:

Achala Jethmalani, Economist, RBL Bank, said: “A food for thought policy. In a 4:2 vote the MPC maintained a status-quo on policy rates and stance. With food basket having a weight of 46% in inflation, it cannot be completely ignored. More so, when the risk is due to the nature of food inflation which has been more persistent than transitory. The weight to the thought of tracking inflation excluding food or looking at core inflation was reduced. The proactive liquidity management has kept liquidity conditions benign, and a pivot to easy policy is still a couple of quarters away. The majority of MPC has reiterated on its 4% inflation target and for the banking sector, the Governor (re)emphasised on deposit mobilization as deposit growth has been trailing credit growth. Overall, with the growth forecast of 7.2% YoY and inflation forecast of 4.5% for FY25 the MPC is not seen in a hurry to pivot to cuts in CY24. We still see first rate cut to come through in Q1 CY25.”

RBI MPC LIVE Updates:

Dr. Sachin Chopda, MD Pushpam Group, said: “The Reserve Bank of India’s decision to keep the repo rate at 6.5% for the ninth time shows its dedication to economic stability. This consistent policy provides certainty to the real estate sector. Stable interest rates mean predictable EMI payments for homebuyers, making property ownership more accessible. Developers can plan their projects confidently, leading to steady investments and job creation. While inflation remains a concern, the RBI’s cautious approach balances growth and price stability, benefiting the real estate market.”

RBI MPC LIVE Updates: Vivek Iyer, Partner, Grant Thornton Bharat On Food Inflation

“Food inflation continues to be an issue with geo-political complexities increasing the supply side risks to inflation. There is a big challenge that these will get baked into inflation expectations and hence it’s extremely important for the banking regulator to demonstrate action to arrest the same. Despite some of the recent rate cuts by different countries globally, we are glad to see the RBI governor focusing on India realities and taking a decision. “

RBI MPC LIVE Updates: Ajay Kumar Srivastava, Managing Director & CEO, Indian Overseas Bank On RBI Decision

The RBI MPC’s decision to keep the repo rate unchanged at 6.5% as well as project a GDP growth for FY25 at 7.2 % is a very well-balanced measure that has been undertaken, and we welcome this move. Given that the current global financial markets have been in turmoil on concerns of growth slowdown, the RBI MPC’s decision to maintain its ‘Withdrawal on Accommodation’ stance as well as keep the standing deposit facility rates and marginal standing facility rates unchanged showcases a positive outcome for the banking sector to chart towards further growth.

RBI MPC LIVE Updates: V. P. Nandakumar, MD & CEO at Manappuram Finance On MPC decision

Today’s MPC decision to keep the repo rate unchanged at 6.5% did not come as any surprise as the rate setting committee once again reiterated its stand on containing inflation without sacrificing growth. More importantly, the apex bank has kept the GDP growth forecast for the current fiscal unchanged at 7.2% which underscores its stance of `withdrawing accommodation’ while supporting growth. The MPC has decided to keep the repo and other policy rates unchanged in view of its inflation forecast for the current fiscal pegged at 4.5%. Though headline CPI print is moderating, the apex bank has decided to keep a strict vigil on underlying price pressures in view of the higher food prices. The key takeaway from the Policy is that a rate cut may be three or four quarters away depending on evolving headline inflation print and economic growth.

RBI MPC LIVE Updates: Amit Jain, Chairman and Managing Director, Arkade Group on RBI MPC Announcement

“As anticipated, RBI’s decision to keep the repo rate unchanged is a positive indicator for the real estate industry. The Indian real estate industry and the economy would have greatly benefitted from a rate cut, given that current macroeconomic parameters are favourable and the rate has been maintained at 6.5%. This is the longest the RBI has maintained a status quo in 25 years. We can expect more homebuyers and fence-sitters to come forward and fulfil their property purchases towards the end of this quarter and into 2025. From a borrowing cost perspective, this move ensures that homebuyers’ EMIs don’t increase, and for developers, it doesn’t increase their financial burden owing to the consistent rate of cost of capital. The MMR real estate market is also expected to witness strong purchasing demand from consumers, with infrastructure projects seeing incremental interest in the coming years and this will help to boost the economic growth too”.

RBI MPC LIVE Updates: Property Ownership More Accessible

Dr. Sachin Chopda, MD, Pushpam Group, said, “The RBI’s decision to keep the repo rate at 6.5% for the ninth time shows its dedication to economic stability. This consistent policy provides certainty to the real estate sector. Stable interest rates mean predictable EMI payments for homebuyers, making property ownership more accessible. Developers can plan their projects confidently, leading to steady investments and job creation. While inflation remains a concern, the RBI’s cautious approach balances growth and price stability, benefiting the real estate market.”

RBI MPC LIVE Updates: ‘Surge in Top-up Housing Loans Not System-wide Issue’

Reserve Bank Governor Shaktikanta Das on Thursday said the surge in top-up housing loans is not a system-wide issue but confined to a few entities.

Das said, “Regulatory requirements in top-up housing loans are not being followed by certain entities and it is not a system-level problem.”

Such cases are being dealt with at the supervisory level bilaterally, he said.

RBI MPC LIVE Updates: Significance For Real Estate Sector

Vishal Raheja, Founder & MD, InvestoXpert, said, “The decision by RBI holds greater significance to the real estate sector, as it heralds greater stability in borrowing costs and a more predictable environment to both the developer and buyer. For a developer, keeping the repo rate status quo can help retain current project financing costs effectively, which is principal in financial planning and actual project execution. This relieves immediate pressure off the loan rate fluctuations and lends better financial management. This consistency can also help developers either back out or lower the inflated costs of new projects, hence making them more affordable and therefore attractive to buyers.”

RBI MPC LIVE Updates: Stable Policy Rate To Support Homebuyer Sentiment

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “In line with expectations the RBI continues to maintain the policy repo rate at 6.5%, especially considering the inflationary pressures, which are driven by persistently high food prices.”

Given that the system-wide liquidity is in surplus, by holding the rate steady the RBI seeks to mitigate inflation without stifling economic momentum. This decision underscores the RBI’s commitment to ensuring long-term price stability while fostering a conducive environment for sustainable economic growth. While some high-frequency indicators indicate some moderation in growth it is encouraging that the central bank is confident of 7.2% GDP growth for FY25.

The decision to keep policy rates unchanged is particularly beneficial for the real estate sector, as stable interest rates mean that borrowing costs for homebuyers and developers remain constant, encouraging further property investments. This stability will foster confidence among potential homebuyers, and support ongoing residential sales momentum and boost housing demand, contributing to the sector’s growth.

The RBI is closely monitoring global geopolitical tensions and economic volatility, which continue to pose significant risks to the global economy. Heightened geopolitical risks, such as ongoing conflicts and trade tensions, have led to increased market volatility and uncertainty. These factors further justify the need for a cautious monetary policy stance to safeguard India’s economic stability.”

RBI MPC LIVE Updates: ‘Decision Prompted By India’s Strong GDP Growth’

Anurag Mathur, CEO, Savills India, said, “We believe that the RBI’s decision is prompted by India’s strong GDP growth of 7.8% in the quarter ending March 2024, exceeding all predictions. Furthermore, retail inflation, which was recorded at 5.1% in June 2024, remains well within the RBI’s tolerance zone of 6%. However, rising food inflation could pose a risk but is unlikely to spill over to core inflation. This has led several industry bodies to predict that India’s growth will exceed 7.5% in FY 2024-2025, maintaining its position among the fastest-growing economies globally. The stable repo rate is expected to boost confidence among real estate stakeholders, particularly for consumers and investors. This is likely to boost housing sales velocity, especially during the upcoming festive season, which is considered auspicious for buying homes. This will also help maintain the sector’s attractiveness for institutional funding. Noteworthily, a higher probability of interest rate cut by US Federal Reserve in the upcoming meeting may influence the RBI’s stance on Indian repo rates in short to medium term.”

RBI MPC LIVE Updates: Sensex falls 350 pts in volatile trade; Nifty below 24,200; RBI keeps repo rate unchanged at 6.5%

RBI MPC Meeting 2024: Primary objective is to keep the call rate aligned with our operating target, says RBI

“Previously, we faced a unique liquidity situation where government balances accumulated while spending lagged, leading to tighter liquidity. Currently, liquidity conditions are more balanced, allowing us to maintain the call rate at the center of the corridor. Our primary objective is to keep the call rate aligned with our operating target, reflecting our monetary policy stance, which will continue to be ‘Withdrawal of Accommodation.’”

RBI MPC LIVE Updates:

Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Shares and Stock Brokers

The RBI in its 50th MPC meet decided to keep its stance on both policy rates and liquidity unchanged. While there have been concerns around restrictive rates taking a toll on domestic growth, governor Das emphasised the need for a central bank to maintain price stability, a necessary component for sustained economic momentum. A key point to note is his emphasis on food inflation and the fact that MPC was willing to look through it in case it will transistory but as recent experience has suggested, food prices have remained elevated for too long and given a 46% weight in the CPI basket, this component cannot and should not be ignored. High food inflation with its tendency to spill over to core inflation and unanchor inflation expectations as has happened post Nov’23 remains the primary concern keeping RBI unhinged. All this in the backdrop of robust economic growth momentum with Indian PMI’s remaining one of the highest amongst major global economies suggests MPC is not too worried about rates restricting growth. This can further be observed as the central bank kept its forecasts for rates unchanged at 7.2% for FY25. On a net basis we think the policy was nothing out of consensus and hence remains neutral for the markets.