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RBI seen holding rates in the remainder of FY20

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Reserve Bank of India RBI

New Delhi, Dec 10 : Notwithstanding growth pangs, the Reserve Bank is expected to maintain the accommodative monetary easing pause till the end of FY20 to contain retail inflation levels, say industry observers.

Economists and industry experts pointed out that an imminent rise in retail food inflation over the next two months will override growth concerns and deter RBI to go in for a rate cut during the final monetary policy review for FY20 in Februray.

“In our view, the CPI inflation will rise sharply in the next two prints. So, we expect a pause in the February 2020 policy review,” said ICRA Principal Economist Aditi Nayar.

“Further monetary easing may not be sufficient to trigger a rapid revival in economic growth in the current situation.”

Recently, RBI’s monetary policy committee in its fifth review of the current fiscal maintained the repo, or short-term lending rate for commercial banks at 5.15 per cent.

The apex bank had reduced key lending rates during the last five policy reviews to reverse the current consumption slowdown that has plagued the country’s economy.

RBI Governor Shaktikanta Das defended the decision by recalling the “primary objective” of the central bank was inflation targeting and price control.

He pointed out that headline inflation is currently high, largely due to rise in food inflation. Das added that food inflation will remain “very high” during January-March, which prompted the RBI to hit the pause button on rate cuts.

Last month, macro-economic data showed that a substantial rise in food prices had lifted India’s October retail inflation to 4.62 per cent from 3.99 per cent in September.

The National Statistics Office is slated to release the macro-economic data point of Consumer Price Index for November on December 12, followed a day later by Wholesale Price Index.

Besides, RBI reduced the country’s FY20 GDP growth forecast from 6.1 per cent in the October policy to 5 per cent.

“Interestingly, the RBI seemed content with the pace of transmission and no longer sees the transmission as staggered and incomplete,” Edelweiss Securities’ Economist Madhavi Arora.

“We think that this easing pause is temporary. Even so, our estimates suggest inflation will likely remain above 5 per cent in 4QFY20 and could constrain a rate cut in February.”

Furthermore, RBI may await the budgetary announcements and the fiscal measures thereof before any decision to revise the rates.

According to Acuite Ratings & Research Lead Economist Karan Mehrishi: “At this point, an accommodative policy in pause mode appears likely till Q1 FY21.

“While there may be a potential risk of a rate hike if the inflation print remains persistently elevated along with a comfortable liquidity scenario, it is likely that the MPC will abstain from such action unless there is a modest revival in growth rate.”

(Rohit Vaid can be contacted at [email protected])

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Vodafone quits Facebook’s Libra cryptocurrency project

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San Francisco, Jan 22 Telecom major Vodafone has joined the list of top companies which have backed out from Facebook’s controversial Libra cryptocurrency project.

Vodafone joins PayPal, Mastercard, Visa, Mercado Pago, eBay, Stripe and Booking Holdings in withdrawing from the controversial project — and is the first company to exit after the Libra Association was formed in October last year, Coindesk reported on Tuesday.

The companies have left owing to concerns about heightened regulatory scrutiny and users’ data privacy.

“We can confirm that Vodafone is no longer a member of the Libra Association. Although the makeup of the Association members may change over time, the design of Libra’s governance and technology ensures the Libra payment system will remain resilient,” the Libra Association said in a statement.

“The Association is continuing the work to achieve a safe, transparent, and consumer-friendly implementation of the Libra payment system.”

Despite top-notch firms pulling out, Facebook and 20 partner organisations formally joined the digital currency Libra project in Geneva in October.

The Libra Association said that more than 1,500 entities have expressed an interest in joining the digital currency project.

Several US senators have opposed Facebook’s digital coin, arguing that the social networking giant has been irresponsible with user data privacy. They have even called the digital cryptocurrency Libra “delusional” and “dangerous”.

Facebook CEO Mark Zuckerberg testified before Congress in October about Libra, defending the idea, but acknowledging the struggles left to overcome.

In a six-hour grilling at a House Financial Services Committee hearing, both Democrat and Republican lawmakers expressed dissatisfaction with Facebook’s cryptocurrency plans.

“As I have examined Facebook’s various problems, I have come to the conclusion that it would be beneficial for all if Facebook concentrates on addressing its many existing deficiencies and failures before proceeding any further on the Libra project,” said California Representative Maxine Waters.

“Facebook’s internal motto was for a long time ‘move fast and break things.’ Mr. Zuckerberg, we do not want to break the international monetary system,” added New York Democrat Nydia VelAizquez.

Libra has failed in its current form, according to the President of Switzerland.

In a media interview, Swiss President and Finance Minister Ueli Maurer stated that Libra does not have a chance of being successful “because the basket of currencies that is deposited in this currency is not accepted by the national (central) banks”.

“The project in this form has actually failed,” Maurer was quoted as saying.

The Libra project, which is still in development, aims for the launch of its first version this year.

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Vodafone quits Facebook’s Libra cryptocurrency project

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vodafone

San Francisco: Vodafone has become the latest big player who have decided to quit Facebook’s controversial Libra cryptocurrency project.

Vodafone joins PayPal, Mastercard, Visa, Mercado Pago, eBay, Stripe and Booking Holdings in withdrawing from the controversial project — and is the first company to exit after the Libra Association was formed in October last year, coindesk reported on Tuesday.

The companies left owing to concerns about heightened regulatory scrutiny.

“We can confirm that Vodafone is no longer a member of the Libra Association. Although the makeup of the Association members may change over time, the design of Libra’s governance and technology ensures the Libra payment system will remain resilient,” the Libra Association said in a statement.

“The Association is continuing the work to achieve a safe, transparent, and consumer-friendly implementation of the Libra payment system.”

Despite top-notch firms pulling out, Facebook and 20 partner organisations formally joined the digital currency Libra project in Geneva in October.

The Libra Association said that more than 1,500 entities have expressed an interest in joining the digital currency project.

Several US senators have opposed Facebook’s digital coin, arguing that the social networking giant has been irresponsible with user data privacy. They have even called the digital cryptocurrency Libra “delusional” and “dangerous”.

Facebook CEO Mark Zuckerberg testified before Congress in October about Libra, defending the idea, but acknowledging the struggles left to overcome.

Libra has failed in its current form, according to the President of Switzerland.

In a media interview, Swiss President and Finance Minister Ueli Maurer stated that Libra does not have a chance of being successful “because the basket of currencies that is deposited in this currency is not accepted by the national (central) banks”.

“The project in this form has actually failed,” Maurer was quoted as saying.

The Libra project, which is still in development, aims for the launch of its first version this year.

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Markets open on a positive note on Wednesday morning

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Sensex equity Nifty

Mumbai: The 30-scrip Sensitive Index (Sensex) on Wednesday opened on a positive note.

The Sensex of the BSE opened at 41,467.13 points and touched a high of 41,532.29 points. The Sensex touched a low of 41,451.71 points.

On Tuesday the Sensex closed at 41,323.81 points.

The Sensex was trading at 41,466.43 points up by 141.73 points or 0.35 per cent at 9.26 a.m

On the other hand, the broader 50-scrip Nifty at National Stock Exchange (NSE) opened at 12,218.35 points after closing at 12,169.85 points on Tuesday.

The Nifty is trading at 12,203.35 points on Wednesday morning at 9.29 a.m.

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