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 the repo rate by 50 basis points to 5.90%
• MPC vote unanimously to remain focused on the 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 the 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