Anish Nanda’s Post

My Analysis: Expect no Rate Cuts It is indeed unlikely that the RBI's Monetary Policy Committee (MPC) will cut rates in the near future. One of the key reasons is the central bank's focus on controlling inflation and maintaining economic stability. The MPC has maintained the repo rate at 6.5% since February 2023, and there is a strong consensus among analysts and experts that this rate will likely remain unchanged in the upcoming policy review [[❞]](https://lnkd.in/dYT3t4UE) [[❞]](https://lnkd.in/dutJq-Gh). Moreover, the RBI has been resorting to unconventional methods to manage excess liquidity in the market. These methods include open market operations (OMOs) and the use of instruments like the standing deposit facility (SDF), which help absorb surplus liquidity without altering the policy rates directly. This approach helps in managing inflation and stabilizing the economy while avoiding the potential negative impacts of frequent rate changes [[❞]](https://lnkd.in/dCJNXPPa). Given the current economic indicators and inflationary pressures, a rate cut does not seem imminent. The RBI is expected to continue its cautious approach, closely monitoring economic conditions and using a mix of conventional and unconventional tools to achieve its monetary policy objectives.

RBI Monetary Policy tomorrow: Here are 5 key things to look out for. 🔍 As we anticipate the RBI’s Monetary Policy announcement, it’s crucial to stay informed. Tomorrow’s key points could signal significant shifts in the financial landscape. Keep an eye on Moneycontrol for the latest insights. #RBIMonetaryPolicy #Finance #EconomicTrends #Moneycontrol #InvestmentStrategy https://lnkd.in/gkDhzzss

RBI Monetary Policy 2024 Highlights: Key Decisions and Market Impact 👇 Repo Rate Unchanged at 6.5% RBI Governor Shaktikanta Das announced that the Monetary Policy Committee (MPC) decided to keep the benchmark repo rate unchanged at 6.5% for the 11th consecutive meeting. The monetary policy stance remains ‘Neutral.’ CRR Cut by 50 bps to 4% The Cash Reserve Ratio (CRR) has been reduced by 50 basis points to 4%. This move is expected to inject additional liquidity into the banking system and boost credit flow. New Benchmark: Secured Overnight Rupee Rate (SORR) To enhance the credibility of interest rate benchmarks and develop the derivatives market, the RBI will introduce the Secured Overnight Rupee Rate (SORR). This benchmark will be based on secured money market transactions, including overnight repo and TREPS. SFBs to Offer Credit Lines via UPI Small Finance Banks (SFBs) have been permitted to extend pre-sanctioned credit lines through UPI. This initiative aims to deepen financial inclusion, especially benefiting ‘new-to-credit’ customers. Inflation Projections Raised for FY25 The RBI revised its FY25 CPI inflation target upward to 4.8% (from 4.5%). Q3 FY25: Increased to 5.7% (from 4.8%). Q4 FY25: Increased to 4.5% (from 4.2%). Q1 FY26: Increased to 4.6% (from 4.3%). Q2 FY26: Estimated at 4%. GDP Growth Estimate Lowered The FY25 GDP growth projection has been cut to 6.6% (from 7.2%). Q3 FY25: Revised to 6.8% (from 7.4%). Q4 FY25: Revised to 7.2% (from 7.4%). Q1 FY26: Revised to 6.9% (from 7.3%). Q2 FY26: Estimated at 7.3%. Impact on Markets Indian equity markets (Sensex and Nifty 50) turned positive after the CRR cut announcement, signaling optimism among investors. Stay tuned for further updates as the RBI’s policy measures unfold and their implications become clearer for the financial markets and the broader economy.

The Reserve Bank's unchanging stance on Policy rates How does this status quo impact the workings of the economy? Will this be maintained even after the policy rates changes announced by the Federal Reserve? In this 499th post, we explore about the Unwavering Determination of the Reserve Bank and the grounds it holds.

𝐌𝐎𝐍𝐄𝐓𝐀𝐑𝐘 𝐏𝐎𝐋𝐈𝐂𝐘 𝐀𝐍𝐃 𝐒𝐎𝐂𝐈𝐀𝐋 𝐉𝐔𝐒𝐓𝐈𝐂𝐄:- 𝐓𝐇𝐄 𝐆𝐎𝐋𝐃𝐈𝐋𝐎𝐂𝐊𝐒 𝐃𝐈𝐋𝐄𝐌𝐌𝐀 𝐓𝐡𝐞 𝐘𝐞𝐫𝐤𝐞𝐬-𝐝𝐨𝐝𝐬𝐨𝐧 𝐥𝐚𝐰 states that there is an empirical relationship between excitement and performance in the quest for balance Goldilocks needed to find the perfect temperature of porridge among the three bowls of porridge which belonged to the three bears The three bowls of porridge in this context represent the three options avaialble to the apex bank namely; 1. Maintain the status quo by leaving the rates unchanged 2. rate cuts 3. rate hike The apex bank's option is self-evident. For the umpteenth time, it voted in favour of a hike in the MPC rate by 50 basis points to 27.25% Appositely, the opening riff of the preamble to the Fiscal Responsibility Act of 2007 (see also section 16 of the CFRN 1999) developed the theme in the following words: AN ACT...... TO ENSURE LONG-TERM MACRO-ECONOMIC STABILITY OF THE NATIONAL ECONOMY- The purpose of the preamble is to shed light on the purpose of the statute. This could limit or expand it. ADAMU V FRN 2021 LPELR 54598 CA It is not in dispute that the key pillars of macroeconomic policy include fiscal policy, exchange rate policy, monetary policy, inflation and economic growth. I forgot to add psychological stress.😊😊 The decision to hike rates presents a compelling option for dollar 💵 denominated emerging markets (EM)bonds to capture yield as they become safer bets for investors that seek less currency risk and stability (migration of funds) This resolve of the apex regulator discounted the PMI (purcahsers managers Index which guages purchasing power in the manufacturing sector). It took a dip and hit an all time low below the 50 points threshold. The increase in the Cash Reserve Ratio (CRR) requirement of commercial and merchant banks by 50 basis points would result in low and negligible lending that may stiffle growth or induce a sluggish growth appeal Prior to the September MPC meeting, the Federal Reserve had slashed rates by 50 basis points and the assumption was that most EMs would piggy-back on the Fed for monetary policy direction. China for instance lowered rates and has a bazooka stimulus package to revamp its ailing economy in order to meet its ambitious 5% GDP target for the current year However just like the saying goes; assumptions are the termites of relationships, we do not want our best results held back by false constructs and untested assumptions As investors continue to look for bright spots defined by structural reforms and resilience in the EM world, the risk horizon should never be wished away. In the final analysis monetary policy has a very long tail. it is not just about juggling one ball but about six balls.. credit growth and long term yields In such perilous times as this, Is it right to say like John Kenneth Galbraith that monetary policy is a feeble reed on which to lean?

The RBI's latest monetary policy meeting caught people's attention because of its welcome change of stance from "withdrawal of accommodation" to "neutral," even though it kept the repo rate the same. "There is no room for complacency" was the clear message that resonated in the address. RBI Governor Shaktikanta Das said this change gives the MPC more room to move, but he stressed that inflation is still a big worry. Inflation seems to be cooling off a bit, but it's not likely to fall into the 2-4% target range anytime soon. So even with the softer stance, a rate cut probably isn't coming very soon, with the inflation horse still under close watch. As the December policy meeting gets closer, some people think it might bring a rate cut, but the overall numbers and seasonal inflation trends might make this unlikely to happen right away. As inflation risks linger, we need to focus on long-term economic growth and strong ways to handle risks in business. Innovation in processes and new age technology adoption in credit risk mitigation will continue to be on the top of agenda for banks, NBFCs and Fintech lenders. #RBIPolicy #InflationControl #MonetaryPolicy #EconomicOutlook #RepoRate #banking #CreditRiskManagement #technology #fintech #credgenics https://lnkd.in/ehFxRctz

The Monetary Policy Committee (MPC) decided to reduce the policy rate by 100 bps to 19.5 percent at its meeting held today. The MPC noted that the June 2024 inflation was slightly better than anticipated. Moreover, the external account continued to improve, as reflected by the build-up in SBP’s FX reserves despite substantial repayments of debt and other obligations. The Committee assessed that, despite today’s decision, the monetary policy stance remains adequately tight to guide inflation towards the medium-term target of 5 – 7 percent.

MPC decided by a majority of 5:1 to keep the policy repo rate unchanged. Policy stance unanimously changed to “neutral” and to remain unambiguously focused on durable alignment of inflation with the target, while supporting growth” RBI will continue to monitor evolving inflation dynamics and incoming data for the economic outlook for its alignment while supporting growth. Let us know in the comments if you expect the rate cut/change at the next Dec MPC meeting. #RBI #MPC #Policy #Investing #Repo #Ratecut #MutualFunds

Are you aware? Rising Statutory Liquidity Ratio help control economic inflation. 🤔 Okay, so let's first clarify what the Statutory Liquidity Ratio is before understanding the larger picture. Statutory Liquidity Ratio popularly called SLR is the minimum percentage of deposits that the commercial bank maintains through gold, cash and other securities. In other words, any commercial bank must maintain reserves in cash, gold, or other securities as required by RBI regulations. Alright, so here are the reasons- The first is to keep financial institution's liquidity stable, to Encourage the purchase of government securities and control the flow of credit and inflation. According to RBI regulations, the current SLR is 18%, meaning that for every 100 Rp deposits made into the bank, 18 Rp must be retained in liquid assets. If the SLR is raised to 40%, the government will directly prevent further inflation in the economy. This means that for every 100 Rp, they will have 40 Rp in liquid assets, leaving only 60 Rp available for banks to lend to consumers, resulting in less money moving around in the economy. Thus, by raising SLR, the economy's money supply can be limited, resulting in a decrease in inflation. Conversely, if SLR declines, a lot of money is available in the markets, increasing inflation. This is how the government manages inflation in relation to SLR. #stockmarket #economy

RBI Monetary Policy: Here are 5 key things to look for tomorrow 1. Repo Rate Unchanged: The RBI has maintained the repo rate at 6.5 percent since April 2023, indicating a continuation of the monetary policy stance without any adjustment in this round. 2. Monetary Policy Stance: The current stance of the RBI is towards the withdrawal of accommodation, suggesting a bias towards potential rate hikes rather than cuts. This stance is expected to remain unchanged, according to the majority of economists and bankers. 3. GDP Growth Projection: While the RBI had projected a GDP growth rate of 7 percent for FY25 in the February policy review, there's an expectation among experts that the central bank might revise this projection based on the surprise increase in the third quarter of FY24. 4. Inflation Target: Despite inflation being above the RBI's medium-term target of 4 percent, experts anticipate minor adjustments in the inflation forecast, particularly due to easing fuel and cooking gas prices. However, no significant lowering of the inflation target is expected. 5. Liquidity Measures: The RBI is likely to continue its fine-tuning of liquidity through repo and reverse repo auctions. Experts suggest that the central bank may prefer to micromanage daily liquidity positions without announcing advance measures to manage liquidity, indicating a continuation of current liquidity management strategies.