The RBI Monetary Policy Committee and Impact on Market
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The RBI Monetary Policy Committee and Impact on Market

The Reserve Bank of India Monetary Policy Committee on Friday maintained the status quo on repo and reverse repo rates in its last bi-monthly meeting of the current financial year.

The central bank maintained the repo rate at a record low of 4 per cent and the reverse repo rate at 3.35 per cent. All six members of the Monetary Policy Committee – including RBI Governor Shaktikanta Das – voted to leave the policy rate unchanged.

Sowing of bumper Kharif crop and growing rabi is a sign of stable food inflation. Outlook on growth has improved significantly. Time is needed to support development. The RBI governor said that the aim is to return the economy to a higher growth path.

Das asserted that the signs of recovery were further strengthened with a list of expanding areas that were normal. The MPC maintained that it would keep its policy necessary for a long time.

Economists had expected the MPC to maintain repo and reverse repo rates at their current levels, giving more momentum to an economy that recorded its first GDP contraction in 2020 due to high levels of CPI inflation in 40-21 years Is on its way to do.

Retail inflation rose to 4.59 per cent in December, far below economists’ expectations and 6.93 per cent in the previous month, still above the central bank’s medium-term target of 4%.

GDP growth of 10.5% in FY 2012

RBI said that India’s GDP growth rate is likely to be 10.5 per cent in FY 2015-22.

“The budget provides a strong impetus for the revival of the health and infra sector and will strengthen domestic demand. Das said that the earlier Atmanabir provocation has started its work. The projected increase in CAPEX by the government augurs well for investment demand, thereby improving reliability in spending quality.

He also said that the demand for electricity resulted in a broader generalization of economic activity than in December. The vaccination campaign will provide an impetus for the restoration of contact intensive areas.

Direct Retail Access to G-Sec Mart

In a major announcement, the RBI said it would tap retail investors for government borrowing, giving retail investors direct access to deal in government securities.
“We will provide retail investors online access to the gilt market through Retail Direct. Providing retail investors access to primary and secondary government securities markets. Das said that the retail investors’ allowance along with the HTM exemption would make it easier for the government to meet the government’s lending program in FY12.

Inflation: 5-5.2% in H1 FY22

The central bank said its outlook for core inflation was influenced by cost-pressures. The RBI said that the concerted policy action of both the Center and the state is important so that the current cost formation is expedited.
RBI projected CPI inflation at 5.2 per cent in Jan-Mar while inflation H1FY22 inflation at 5-5.2 per cent.

“Maintenance of financial stability, the gradual development of the yield curve was clearly perceived as a ‘public good’.” Slavery said the liquidity management stance still remains and is consistent with the policy stance.

On credit from the government

RBI has assumed that it will ensure the government’s market borrowing program is systematically completed for the fiscal year 2012. The government has stated in its budget estimate that it will borrow Rs 12.05 lakh crore from the market in 2021-22, which is lower than the estimated Rs 12.80 lakh crore for the current financial year.

The huge lending program has elevated 10-year bond yields, leading to a boom in the debt market. On Friday, the yield rose 7 bps, or 1.15 per cent, to 6.14 per cent. Yield before the budget stood at 5.94 per cent.

Higher yields mean that the government will have to raise money at a higher cost, further restricting its finances. Apart from this, RBI said that it would also include NBFCs under its TLTRO tap scheme to provide incremental loans to stressed areas. The central bank will reinstate the CRR in two phases from March.

“It has been decided to gradually restore the CRR to 3.5 per cent from March and then to 4 per cent from 22 May. MSF facility will be available to banks by September. Das said that we will also increase the distribution of maturity category from organized to organized under SLR.

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About Dwipen Gogoi

Dwipen Gogoi, MBA (IB and IT) and PGDFT from Pune. (Technical Analyst of AliceBlue) I am a You Tuber, Blogger and doing Technical Analysis last 10 years in Stock, Commodity and Forex Market. i am creating various trading strategies for day traders, swing traders, scalp traders.

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