Justin Dhanabalan’s Post

https://lnkd.in/gWpjh7am The repo policy rate remained unchanged at 6.5%. This will help to manage liquidity and credit creation in the system. With a projected 7.5% GDP Growth rate this will enhance and boost the credit offtake and consumption. With rising inflation, constant growth policy with an unchanged Repo rate, RBI's monetary policy signals the will to improve consumption in the economy. Though OMO has led the growth of Repo there was no mention of OMO in the monetary policy announcement. Though CPI has remained stagnant that implies no change in unemployment levels

RBI Monetary policy committee meeting 2024 highlights: Today, December 6, the Reserve Bank of India (RBI) released its fifth bi-monthly monetary policy for FY25. For the eleventh consecutive meeting, the six-member Monetary Policy Committee (MPC), chaired by RBI Governor Shaktikanta Das, voted by a majority of 4 to 2 to maintain the benchmark repo rate at 6.5%, maintain the monetary policy stance of "Neutral," and remain unwaveringly focused on a long-term alignment of inflation with the target while promoting growth. Additionally, the cash reserve ratio (CRR) was cut by 50 basis points (bps) to 4% by the rate-setting panel. Highlights of the RBI MPC: Important lessons learned from the December RBI Policy Highlights of the RBI MPC: The following are the main conclusions from today's December RBI Policy: 1] Policy Actions: The 6.5% repo rate remained unchanged. The policy's "Neutral" attitude remains unaltered. SDF rate remained constant at 6.25%. MSF rate remained same at 6.75%. The bank rate remains at 6.75%. By a vote of 4 to 2, MPC members decided to keep things as they were. 50 bps to 4% CRR drop Two tranches of ₹1.16 lakh crore would be released into the banking sector by the CRR cut. 2. GDP Growth Projections: Estimates for FY25 GDP growth dropped from 7.2% to 6.6%. Estimates of quarterly GDP growth are FY25: Reduced from 7.2% to 6.6% Q3FY25: Reduced from 7.4% to 6.8% Q4FY25: Reduced from 7.4% to 7.2% Q1FY26: Reduced from 7.3% to 6.9% Q2FY26: Forecast for CPI Inflation at 7.3% 3. The CPI inflation target for FY25 was raised from 4.5% to 4.8%. The forecasts for quarterly inflation are FY25: Raised to 4.8% from 4.5% Q3FY25: Raised to 5.7% from 4.8% Q4FY25: Raised to 4.5% from 4.2% Q1FY26: Raised to 4.6% from 4.3% Q2FY26: At 4% 4] Additional measures: The FX-Retail platform will be connected to NPCI's Bharat Connect platform. The Secured Money Markets benchmark, the Secured Overnight Rupee Rate (SORR), will be introduced. Collateral-free agricultural loans would now be worth ₹2 lakh per borrower instead of ₹1.6 lakh. Through the UP, small finance banks are allowed to offer pre-approved loan lines. Forming a committee to Suggest the Financial Sector's Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) Launch of Mule Hunter and the Introduction of Podcasting as an Extra Communication Channel. An AI method for locating mule bank accounts Launch of the Open Regulation Initiative "Connect 2 Regulate"

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.

UASA Media Release: First repo rate cut in four years brings relief UASA welcomes today’s long-awaited repo rate cut – the first in more than four years – by the South African Reserve Bank’s (SARB’s) Monetary Policy Committee (MPC). Following yesterday’s Consumer Price Index (CPI) announcement stating that inflation fell below the SARB’s 4,5% target range, the 25-basis point cut in the repo rate to 8% is a welcome relief for most workers and consumers. The prime lending rate will now be 11,50%. Given the current outlook, the repo rate will likely drop again in November by at least 25 basis points. The CPI outlook has also brightened as inflation expectations decreased to 4.8% for 2025 and 2026 from above 5%. Consequently, South African consumers can look forward to further interest rate reductions in the New Year. Although depositors will receive a lower income from interest-related investments, borrowing costs will decrease and provide relief to consumers, especially those with high levels of debt. The governor of the SARB, Lesetja Kganyago, warned that many upside risks to the CPI still exist and that the MPC will remain data-dependent at future MPC meetings. This cut will make borrowing more attractive for individuals and businesses alike, encourage consumer spending and hopefully set us on the track of economic recovery. At the very least the cut will ease the financial stress of workers in these difficult times. The next MPC meeting is on 21 November. www.uasa.org.za

Repo rate remains unchanged by RBI as on yesterday post MPC meet. However Cash Reserve Ratio has been reduced to 4% from 4.5% to meet the liquidity demands in the market, basically to improve lending and allowing banks to earn interest income. While the core inflation excluding food is said to be below 4.5% , it can be expected that a 25 bps cut will materialize in the next MPC meet. However, as I stand on my ground that interest rates are just tools of the RBI to manage money circulation in the market to balance growth and inflation. It has nothing to do with human capital development, ease of business or living conditions of citizens. Consumption cannot be driven by interest rate cuts alone. That is the responsibility of the government to come up with policies that cuts government spending on unnecessary assets and put the revenue receipts to the right use. RBI cannot provide a solution more than a rate cut probably in the next MPC but government has a 1000 things to ensure the consumption or house hold savings pick up in the economy again. #MPC #CRR#Repo#RBI#Consumption

Repo Rate: RBI did not change the interest rates for the ninth consecutive time, repo rate remains at 6.5% #BimonthlyMonetaryReview #change #consecutive #GovernorShaktikantaDas #interest #MPCMeeting #ninth #rate #Rateofinterest #rates #RBI #RBIGovernor #rbimonetarypolicycommittee #rbireporate #remains #repo #reporate #time

Repo Rate Remains Unchanged This morning, the RBI's Monetary Policy Committee decided to keep the repo rate steady at 6.5% - a move that's keeping borrowing costs unchanged for the tenth time in a row. But there's more to it: The RBI has shifted its policy stance from 'withdrawal of accommodation' to 'neutral'. This means the RBI is now positioning itself to be more adaptable, potentially paving the way for future rate adjustments. GDP growth is retained at a robust 7.2% for FY25. This reflects confidence in our economic resilience despite global headwinds. Inflation is held at 4.5% for the fiscal year. With geopolitical tensions and food prices in flux, this stability speaks volumes about RBI's cautious optimism. Why Does This Matter? Despite pressures from food and fuel, the RBI believes in our economy's growth story. The neutral stance indicates a readiness to either control inflation or boost growth as needed, ensuring we're not caught off-guard by global economic shifts. As the repo rate remains unchanged, loan rates linked to this rate will stay the same, meaning borrowers won't see their EMIs rise. It's anticipated that the RBI might reduce the repo rate by 0.5% in December 2024 if food prices go down. What are your thoughts on this? How do you think this policy impacts us?

Repo rate is the interest rate RBI charges to the banks when they borrow money from RBI. RBI has a target of keeping inflation within the range of 2 to 6%; to maintain this, the MPC (Monetary Policy Committee) reviews the economy every two months. This is called a bi-monthly monetary policy review. When the inflation is above 6%, MPC hikes the Repo rate making loans more costly and hence demand will come down eventually controlling the inflation and vice versa. (Ideal scenario) However, there are many factors apart from the inflation which guides MPC decisions. Lowering the Repo rate         | Low-cost loans to customers         | More demand for goods and services          | Profit of companies will increase         | Good for the equity market To put it in a nutshell, a low-interest rate means a higher return in the equity market and vice versa. #Repo #RBI #Inflation #MPC #Economy #Policy #LowCost #Profit #micofinmart #financeNews #Finance #News #Credible #Data #Facts

SA Reserve Bank reduces repo rate by 25 basis points The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) has decided to reduce the repo rate by 25 basis points, with effect from 31 January 2025. “Four members preferred this action, while two supported an unchanged stance. The committee ultimately agreed that it was possible to reduce the degree of policy restrictiveness, making the stance somewhat more neutral. However, all members were concerned about the uncertain global outlook,” SARB Governor Lesetja Kganyago said on Thursday. Middle of the target range Delivering the first MPC statement for 2025, he said consumer prices and headline inflation averaged 4.4% last year, near […]

SA Reserve Bank reduces repo rate by 25 basis points The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) has decided to reduce the repo rate by 25 basis points, with effect from 31 January 2025. “Four members preferred this action, while two supported an unchanged stance. The committee ultimately agreed that it was possible to reduce the degree of policy restrictiveness, making the stance somewhat more neutral. However, all members were concerned about the uncertain global outlook,” SARB Governor Lesetja Kganyago said on Thursday. Middle of the target range Delivering the first MPC statement for 2025, he said consumer prices and headline inflation averaged 4.4% last year, near […]