RBI MONETARY POLICY SEPTEMBER 2022

Following are the key highlights of the central bank’s September 2022 Monetary Policy Statement unveiled by Governor Shaktikanta Das.    
   
POLICY ACTION:
MPC vote unanimously to increase repo rate by 50 basis points to 5.90%
MPC vote unanimously to remain focused on withdrawal of accommodation
SDF stands at 5.65%; MSF and Bank rate at 6.15%
Objective to achieve the medium-term target for CPI inflation of 4% within a band of +/- 2%, while supporting growth.
The minutes of the MPC’s meeting will be published on October 14, 2022.
The next meeting of the MPC is scheduled during December 5-7, 2022.
 
INFLATION:
Inflation pressures felt at the beginning of the FY have eased but remain elevated across food and energy items.
Assuming normal monsoon and average crude oil price at $100 per barrel
CPI inflation rose to 7% in August from 6.7% in July
CPI inflation projection retained at 6.7% in FY2022-23
Inflation projection breakup for FY23 includes 7.1% for Q2; 6.5% for    
       Q3; 5.8% for Q4.
CPI inflation projected 5.0% for Q1FY2023-24 
 
GROWTH:
Improving outlook for agriculture and allied activities
Rebound in services are boosting the prospects for aggregate supply
Continued thrust on capex, improvement in capacity utilisation in  manufacturing and pick-up in non-food credit sustain the expansion
Headwinds from extended geopolitical tensions, global financial market  
       volatility, tightening global financial conditions
Real GDP growth for 2022-23 projected is retained at 7.2%,
Q2 GDP seen at 6.3 per cent,
Q3 GDP seen at 4.6 per cent,
Q4 GDP seen at 4.6 per cent, 
Real GDP growth for Q1:2023-2024 projected at 7.2%,
 
LIQUIDITY:
SDF stands adjusted to 5.65%
MSF and Bank rate to 6.15%
Surplus liquidity with average daily absorption under the LAF moderating to Rs 2.3 lakh crore during August-September 2022
Merge the 28-day VRRR with the fortnightly 14-day main auction, only  14-day VRRR auctions will be conducted
US dollar appreciated by 14.5% against a basket of major currencies, causing turmoil in currency market globally
CAD for Q1:2022-23 placed at 2.8% with trade deficit at 8.1% of GDP
Indian foreign exchange reserves were placed at US $537.5 billion as  
       on September 23, 2022.
 
ADDITIONAL MEASURES:
Discussion paper on expected loss (EL) for their loan assets provisioning by banks
To introduce a framework for securitisation of stressed assets
Providing internal banking facility for customers of RRBs
Proposed to regulate offline payment aggregators
 
Eforex India 30th September 2022