oppn parties Rate Hike Paused, RBI To Watch Impact Of Earlier Hikes

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  • For the first time ever, Mukesh Ambani buys a 29% stake in Gautam Adani's Mahan Energen, a subsidiary of Adani Power to source 500MW of electricity from the company's power plant in MP
  • Stocks continue to rise on Thursday - Sensex gains 639 points to 73635 and Nifty 203 points to 22326
  • Golf - Indian Open: 3 Indians at tied 14th as Joost Luiten takes the lead with a wonderful 7-under 65
  • IPL: RR beat DC by 12 runs as Riyan Parag (84 off just 45 balls) shines
  • SP drops two candidates owing allegiance to Azam Khan from Rampur and Moradabad
  • In Assam, a controversy erupted after a picture of UPPL leader Benjamin Basumatary, lying on a stack of Rs 500 notes circulated on social media. UPPL is an ally of the BJP
  • AAP's Jalandhar-West MP Sushil Kumar Rinku joins the BJP. He was the only AAP Lok Sabha MP
  • Supreme Court dismisses Centre's plea to review its 2023 verdict in the PMLA case
  • Close save for passengers as they remain unhurt after the wings of two planes graze at Kolkata airport. Pilots derostered and inquiry ordered by DGCA
  • Bengal BJP leader Dilip Ghosh gets notice from the EC as well as the BJP for making ugly remarks about Mamata Banerjee's parentage
  • Sadanand Vasanth Date, who faught terrorists in the 26/11 attack and was awarded the Preisent's Police medal, has been appointed the head of the NIA
  • Centre will borrow Rs 7.5L cr in the first six months of FY25, nearly 50% of the target for the full year
  • 25 stocks, including SBI, will see same day trade settlements from today in the world's fastest settlement mode in both BSE and NSE
  • Stocks recover smartly on Wednesday: Sensex rises 526 points to 72996 and Nifty 118 points to 22123
  • Tennis: Rohan Bopanna-Matthew Ebden reached the semifinals of the Miami Open
Delhi Lt Governor Vinai Kumar Saxena says government cannot be run from jail, hints at President's Rule in the capital ////// In a dangerous incident, the wings of two planes grazed while taxiing on the runway at Kolkata airport, all passengers were safe but DGCA ordered an inquiry and the pilots were derostered
oppn parties
Rate Hike Paused, RBI To Watch Impact Of Earlier Hikes

By Linus Garg
First publised on 2023-04-07 07:20:24

About the Author

Sunil Garodia Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.

The Monetary Policy Committee (MPC) of the RBI, in a unanimous decision, has decided to maintain status quo on keep policy rates in its bi-monthly review meeting in April. The RBI explained that the decision was a 'pause' and not a 'pivot' as the bank studies the impact of continuous rate hikes for the last 5 such meetings. Since it is well-established that policy rate hikes by Central banks take effect after a lag, it is good that the apex bank has decided to pause the hikes despite inflation not being controlled and global economic and geopolitical situation being uncertain. It surprised the financial markets as everyone was expecting another 25 bps hike this time.

RBI governor Shaktikanta Das said that the war against inflation will continue until there is a decline that is durable and the level is closer to the target. He said that "inflation has softened from its elevated levels a year ago, however, it still remains above the upper tolerance band." He further said that "at this stage, we remain watchful of the evolving outlook and the impact of our actions during the past one year on the broader real economy." While warning against the effects of unseasonal rains, Das was upbeat due to moderation in commodity prices and the resilience of the economy to predict a growth of 7% in FY23 while the RBI marginally revised the growth projection for the current year from 6.4% to 6.5%.

Although the MPC decision to pause rate hikes is welcome, its future action will depend on how the inflationary pressures pan out. If oil and commodity prices remain stable or ease in future and if the expectation of a record rabi harvest holds true, price pressures may ease and inflation might come within RBI's tolerance band in the second or third quarter of FY23. Then, the need to hike rates will also diminish. Otherwise, future rate hikes cannot be ruled out.