Monetary Policy Updates: MPC Keeps Rates Unchanged; RBI To Hold OMOs In State Development Loans
Watch: Discussing MPC's Announcements With BloombergQuint's Ira Dugal
Experts React To MPC Decisions, RBI Announcements
Saugata Bhattacharya, Chief Economist, Axis Bank
- The growth estimate helps guide future policy action
- We also have a clearer sense of direction with regard to inflation
- Don’t see further scope for repo rate cuts
- The amount of additional measures in the policy are reaching ECB levels
- Non-disruptive evolution of the bond market has been a constant theme
- The RBI seems to be very serious about spending money to push growth higher
- Would not need statutory legislative change for RBI to conduct OMOs in SDLs
Arvind Chari, Head- Fixed Income, Quantum Advisors
- For the bond market, this is like Christmas came early
- Everything that the bond market has asked for, the RBI Governor has delivered
- Expect bond yields to head down after this
- The increase in the quantum of the OMO is something the market had asked for
- Found the TLTRO, HTM measures very significant for the bond market
- The RBI’s announcement of OMOs in SDLs should reduce the spread of yields over GSECs
- The RBI has been listening to the markets and tried to address dysfunctions
- Today’s was a very big commitment to the market by the RBI
- Market keeps expecting more every time there is an impact
Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities
- GDP and inflation forecasts welcome, in-line with market expectations
- No interest rate cut coming in December
- Growth, demand conditions will indicate if rate cut necessary in February
- Whether policy rate should be lowered in February, or if fiscal policy should be driving force remains to be seen
RBI Proposes To Start Round-The-Clock Availability Of RTGS Facility.
RBI To Conduct Open Market Operations In State Development Loans: Governor Das
- To conduct OMO in SDLs as a special case this year.
- Should expel liquidity concerns regarding SDLs.
In order to impart liquidity to State Development Loans and thereby facility efficient pricing, it has been decided to conduct open market operations in SDLs as a special case during the current financial year. This would improve improve secondary market activity and rationalise SDLs over central government securities of comparable maturities.Shaktikanta Das, Governor, RBI
CPI Inflation To Remain Elevated In September Print
Consumer Price Index inflation will remain elevated in the September print and ease gradually in Q3 and Q3, Das said.
- Supply disruptions and associated margins and mark-ups are major factors driving inflation.
- As supply chains are restored, these wedges should dissipate.
Additional Measures By RBI
- Announcing an on-tap TLTRO with tenors of upto three years with total amount of Rs 1 lakh crore at a floating rate linked to repo rate.
- Amount and period to be enhanced after review.
- Liquidity availed under this scheme can be used to provide bank loans toward this sector.
- In order to provide certainty to banks, RBI to extend dispensation on enhanced limits of SLR securities under HTM category to March 31, 2022.