Sahil Singh Bisht’s Post

RBI kept the benchmark repo rate unchanged at 6.5% for the eight consecutive time and continue with its stance of ‘withdrawal of accommodation’. RBI also raised its GDP growth forecast for FY25 to 7.2% from 7% earlier. The central bank retained FY25 inflation forecast at 4.5%. All eyes were on RBI as yesterday ECB went ahead of the Federal Reserve and cuts the Interest Rates for the first time since 2019. Market consensus expect the first interest rate cut in the month of October with possibility of only 2 rate cuts this year. The next RBI MPC meeting is scheduled on 6th August, 2024. Do you expect an Interest Rate Cut in the next meeting? https://lnkd.in/dM3wy5AK

RBI #Monetary Policy: Here are 5 key things to look for tomorrow The central bank has kept the repo rate unchanged at 6.5 percent since April 2023 MPC. Here are five things to watch out for in the RBI monetary policy on April 5. Monetary policy stance The RBI's policy stance indicates the thinking within the MPC, the rate-setting panel. Currently, its stance is of withdrawal of accommodation. ⭐️Repo rate The repo rate, at which the central bank lends short-term funds to banks, stands at 6.5 percent. The central bank has kept it unchanged since April 2023. ⭐️Monetary policy stance The RBI's policy stance indicates the thinking within the MPC, the rate-setting panel. Currently, its stance is of withdrawal of accommodation. ⭐️GDP growth target In the February policy review, the RBI projected GDP growth of 7 percent for FY25. ⭐️Inflation target The inflation print in February was far above the central bank’s medium-term target of 4 percent. According to the RBI's latest forecast, retail inflation is seen at 5.4 percent for FY24, with Q4 at 5 percent. ⭐️Liquidity measures Experts are of the view that the central bank may continue to maintain the finetuning of liquidity through repo and reverse repo auctions.

The much-awaited rate cut cycle has started. Swiss National Bank announced a surprise rate cut of 25 BPS in its latest monetary policy outcome. The first central bank to announce a rate cut in 2024, expecting the same outcome from the Federal Reserve Board in May or June. Reserve Bank of India (RBI) will also announce the rate cut after the nation's general elections. The best strategy/technique to capitalize on this rate cut: 👉 The best strategy is to park the medium to short-term surplus in long-term govt bonds, Where there is zero credit risk. Significance of this strategy: 👉 When interest rates come down in the economy, for many institutions, HNIs & UHNIs make bonds attractive. 👉 And the bond market attracts the money & this flow will push the bond prices. Investing early in the bonds makes it possible to grab the prices at a lower cost & higher YTM. Why only govt bonds & why not corporate bonds? Investing in corporate bonds requires a comprehensive liquidity analysis of the company and where credit risk exists. By Investing in Govt bonds, one can escape from the credit risk, and interest rate risk will also be zero since central banks are set to announce rate cuts. How to Invest in it: There are two ways to take this exposure: 1. Investing in Govt securities Investing mutual funds. Or 2. Investing directly in Govt securities. This strategy won't create any magical returns. It's just to park surplus in a risk-free avenue.

Amit Goel, Co-founder and Chief Global Strategist at Pace 360, believes the RBI might pivot to a neutral stance, signaling a shift towards easing due to high real rates, low core inflation, and surplus liquidity. Read the article shared below to learn more about the current war for deposits waged by banks and the impact of RBI's policy on the financial markets

**Recap of Last Week's Major Central Bank Decisions** Federal Reserve US Interest Rate: 5.5% Current Decision: The Federal Reserve has kept the current interest rate unchanged for the eighth consecutive meeting. Future Indications: Chairman Jerome Powell has hinted at the possibility of a rate cut in September, contingent on favourable economic data. This is the first time he has suggested a potential rate cut for a specific upcoming meeting. Policy Statement: The latest statement shows a balanced approach towards both inflation and employment goals, moving away from an exclusive focus on inflation. Inflation Progress: Although there has been some progress in reducing inflation, additional evidence is needed before implementing any policy rate reductions with confidence. Bank of Japan Interest Rate: 0.25% Recent Change: The interest rate was increased by 0.15%, marking a gradual shift from its historically ultra-loose monetary policy. Bond Purchase Reduction: Plans have been announced to reduce Japanese Government Bond purchases by approximately 50% by the first quarter of 2026. Future Rate Hikes: Any further increases in interest rates will be contingent on economic data. Background: The Bank of Japan has maintained an ultra-loose monetary policy for decades, including the use of negative interest rates from 2016 until recently. Under Governor Ueda, the bank is beginning to transition towards policy normalisation. These unconventional measures were initially introduced to combat persistent deflation, encourage consumer spending, and stimulate economic growth. Bank of England Interest Rate: 5% Recent Decision: The Monetary Policy Committee narrowly voted (5 in favour, 4 against) to implement the first rate cut of the current cycle, lowering the rate by 0.25%. Governor's Stance: Governor Andrew Bailey supported the rate cut. Future Guidance: The bank did not provide clear indications for future rate decisions, emphasizing reliance on forthcoming economic data. Market Advisory: The bank cautioned against expectations of a return to zero interest rate policies (ZIRP), highlighting that past conditions were exceptional. Growth Projections: The growth forecast for 2024 has been revised to a more optimistic outlook.

Stances Of RBI Monetary Policy : Simplified Monetary policy refers to the steps taken by a country's central bank to control the money supply for economic stability. 🟧 Stances Of Monetary Policy Monetary Policy stance refers to the standpoint or outlook or the guidance of the central bank towards the direction of monetary policy. In the recent monetary policy announced by the RBI for the year 2024-25, the stance of the monetary policy is as follows : “to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth”. Stances of monetary policy are mainly as follows : ▪️ Accommodative ▪️ Hawkish ▪️ Neutral ▪️Calibrated Tightening ▪️ Dovish 🟦 Accommodative Stance Reserve Bank of India (RBI) was on an accommodative stance for the last two years to support the economy during the COVID-19 crisis. An accommodative stance means the central bank is prepared to expand the money supply to boost economic growth. The central bank, during an accommodative policy period, is willing to cut the interest rates. A rate hike is ruled out. The central bank typically adopts an accommodative policy when growth needs policy support and inflation is not the immediate concern. 🟦 Hawkish Stance A hawkish stance indicates that the central bank’s top priority is to keep the inflation low. During such a phase, the central bank is willing to hike interest rates to curb money supply and thus reduce the demand. A hawkish policy also indicates tight monetary policy. When the central bank increases rates or 'tighten' the monetary policy, banks too increase their rate of interest on loans to end borrowers which, in turn, curbs demand in the financial system. 🟦 Neutral Stance A ‘neutral stance’ suggests that the central bank can either cut rate or increase rate. This stance is typically adopted when the policy priority is equal on both inflation and growth. During neutral policy, the central bank doesn’t commit to hike rates or cut. The interest rate can move to either sides depending on incoming data. The guidance indicates that the market can expect a rate action on either way at any point. 🟦 Calibrated Tightening Calibrated tightening means during the current rate cycle, a cut in the repo rate is off the table. But, the rate hike will happen in a calibrated manner. This means the central bank may not go for a rate increase in every policy meeting but the overall policy stance is tilted towards a rate hike. This can happen outside the policy meetings as well if the situation warrants. 🟦 Dovish Stance It is a calmer approach as compared to hawkish. Dovish stance is taken when the economy is not growing and the government wants to guard against deflation and there is a need to stimulate the economy. Dovish stance involves low-interest rates. Low interest rates entice consumers to take credit from banks and other sources. Thanks for reading…

The RBI MPC statement by Governor Das was considered hawkish due to market's high expectations following recent international developments. Das reiterated the central bank's focus on disinflation, shifting away from theories on real interest rates. Deputy Governor Patra mentioned the repo rate aligns with rising potential growth rates. RBI raised CPI inflation forecast to 4.4%, surprising economists, but recent data suggests alignment with earlier estimates. RBI's new guidelines for HFC and NBFC regulations aim to protect depositors' interests, effective January 1, 2025. These measures include increased liquid asset maintenance, credit ratings, deposit tenures, and fund-raising limits. These changes, reflecting caution in deposit-taking licenses, are welcomed from a depositor standpoint. The Federal Open Market Committee decided to maintain the federal funds rate at 5.25% to 5.5%. Jerome Powell indicated a potential interest rate cut in September if inflation progress stalls, citing risks of labor-market weakening. The Bank of Japan raised the short-term policy rate from 0-0.1% to 0.25%.

RBI Policy Meet: What Should Investors Do? Today, the RBI decided to keep the repo rate steady at 6.5% for the tenth consecutive meeting, but the focus has shifted with the central bank changing its policy stance to 'neutral' from 'withdrawal of accommodation'. This signals a potential move towards easing, but with inflation risks still on the horizon. Key Takeaways: >>Repo rate unchanged at 6.5% >>GDP growth for FY25 stays at 7.2% >>Inflation forecast maintained at 4.5% What Should Investors Do? >>Stay on course with asset allocation: Market volatility or possible rate cuts shouldn't shake your long-term strategy. >>Focus on your financial goals: Don’t be swayed by short-term movements. Keep an eye on what matters—growing your wealth sustainably. >>Position for future rate cuts: With a rate reduction likely in early 2025, consider adjusting your fixed-income exposure accordingly. While the RBI signals potential easing in the coming quarters, staying disciplined in your investment approach will help you navigate any short-term uncertainties. 📌 Follow me Prashant Mishra for more such updates.

Stances Of RBI Monetary Policy : Simplified Monetary policy refers to the steps taken by a country's central bank to control the money supply for economic stability. 🟧 Stances Of Monetary Policy Monetary Policy stance refers to the standpoint or outlook or the guidance of the central bank towards the direction of monetary policy. In the recent monetary policy announced by the RBI for the year 2024-25, the stance of the monetary policy is as follows : “to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth”. Stances of monetary policy are mainly as follows : ▪️ Accommodative ▪️ Hawkish ▪️ Neutral ▪️Calibrated Tightening ▪️ Dovish 🟦 Accommodative Stance Reserve Bank of India (RBI) is on an accommodative stance for the last two years to support the economy during the COVID-19 crisis. An accommodative stance means the central bank is prepared to expand the money supply to boost economic growth. The central bank, during an accommodative policy period, is willing to cut the interest rates. A rate hike is ruled out. The central bank typically adopts an accommodative policy when growth needs policy support and inflation is not the immediate concern. 🟦 Hawkish Stance A hawkish stance indicates that the central bank’s top priority is to keep the inflation low. During such a phase, the central bank is willing to hike interest rates to curb money supply and thus reduce the demand. A hawkish policy also indicates tight monetary policy. When the central bank increases rates or 'tighten' the monetary policy, banks too increase their rate of interest on loans to end borrowers which, in turn, curbs demand in the financial system. 🟦 Neutral Stance A ‘neutral stance’ suggests that the central bank can either cut rate or increase rate. This stance is typically adopted when the policy priority is equal on both inflation and growth. During neutral policy, the central bank doesn’t commit to hike rates or cut. The interest rate can move to either sides depending on incoming data. The guidance indicates that the market can expect a rate action on either way at any point. 🟦 Calibrated Tightening Calibrated tightening means during the current rate cycle, a cut in the repo rate is off the table. But, the rate hike will happen in a calibrated manner. This means the central bank may not go for a rate increase in every policy meeting but the overall policy stance is tilted towards a rate hike. This can happen outside the policy meetings as well if the situation warrants. 🟦 Dovish Stance It is a calmer approach as compared to hawkish. Dovish stance is taken when the economy is not growing and the government wants to guard against deflation and there is a need to stimulate the economy. Dovish stance involves low-interest rates. Low interest rates entice consumers to take credit from banks and other sources. Thanks for reading…

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.