MUMBAI: The RBI on Thursday did what was widely expected, keeping the policy rates unchanged at six per cent. It means interest rate hikes are unlikely anytime soon, provided global crude oil prices or local food prices do not turn upside down. For market watchers, the Central bank lowered its inflation forecast to 4.7-5.1 per cent from its previous range of 5.1-5.6 per cent projected in February. However, this wasn’t enough for the central bank to let down its guard. It maintained its neutral stance citing uncertainties lurking round the corner, including the magnitude of MSP prices, risk of fiscal slippages, risk coming from higher expenditure of states, and oil price volatility.
“The inflation print for February did turn out to be softer than our projection. However, the MPC (Monetary Policy Committee) looks ahead. We noted there are several uncertainties around the baseline inflation path, which is why we’ve kept our stance neutral and rate unchanged,” RBI governor Urjit Patel said. While Patel said GDP growth is projected at 7.4 per cent, potential dampeners — including rising trade protectionism — can potentially derail recovery.
“More than the RBI decision to keep rates unchanged, the tone of the policy is a pleasant surprise for the market. The decision to revise downwards the inflation projections and upwards the growth numbers is the best one could have asked for,” RBI chairman Rajnish Kumar said. Liquidity is expected to be in moderate surplus mode in the first half of FY19, RBI deputy Governor Viral Acharya said.
“The evolving liquidity conditions will determine our choice of instruments for transient and durable liquidity management.” Repo rate remains the lowest rate since November, 2010. Five of the six MPC members voted for a hold, while RBI Executive Director Michael Patra pressed for a rate hike
PSPs asked to store data in India Amid growing concerns over digital privacy, the RBI has given payment systems providers an ultimatum: store all consumer data within India. All operators have six months to comply with the regulator’s norms, details of which will be issued within a week. It means new entrants like WhatsApp, which recently ventured into payments in India, also have to follow suit.
RBI for regulatory power over all banks The RBI on Thursday pressed the case for uniformity of powers to regulate both private and public banks. According to RBI deputy governor N S Vishwanath, such a move requires amendments to the Banking Regulation Act (1949). “…As the Governor said, the non-neutrality of the RBI’s powers come from the provisions of the Act and that needs to be changed. The Governor has made the banks position very clear; there will be discussions on this,” he said