#RBI #MPC expected to hold rates for the sixth time.
What are the economists expecting? Vishwanath Nair brings you the details from RBI headquarters.
What are the economists expecting? Vishwanath Nair brings you the details from RBI headquarters.
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TVTranscript
00:00 Asking questions to the MPC and the RBI Governor, our colleague Vishwanath Nair,
00:04 is Banking Editor, joins in right now from right outside the place of action this morning. Vishy,
00:11 all eyes on what the MPC says, if not what the MPC does. I'm trying to understand
00:16 what would be top of your mind in the press conference?
00:25 Right, so as you announced the RBI, the MPCs met for over the last couple of days and today
00:32 they're going to make the latest monetary policy announcement. Now remember that the expectation
00:37 far and wide is that they're going to hold rates again. This will be the sixth time that the MPC
00:43 holds the benchmark interest rates as well as maintains its stance as far as accommodation of
00:51 previous sort of accommodations are concerned. So removal of those accommodations, so that stance is
00:56 likely to continue again. What will be important as you said is what the MPC says versus what it
01:02 does. So what it will say is likely a dovish stance, that's what economists are expecting,
01:07 that at some point in time after April you will start seeing rates coming down. Remember that the
01:14 benchmark report has been set at about 6.5 percent, so with the last six policies that's where it has
01:20 been continuing. So if there is any indication of a rate cut coming anytime soon then that becomes
01:26 an important point to note. Now remember that in December when the CPI numbers did come in,
01:32 they were slightly higher than the 4 percent target, about 5.69 percent. So that will, the
01:38 eyes will be on what the RBI and the MPC view as a future sort of trajectory of inflation. January
01:45 data is still pending, that'll come in maybe next week and that's when we'll know whether the
01:49 inflation trajectory has come down at all. During the last policy the RBI said that it will come
01:54 closer, inflation will come closer to the 4 percent target only in the second half of FY25. So
02:00 we need to see whether that undergoes any kind of change, any kind of outlook on growth. The second
02:05 point of the MPC and the RBI's commentary will focus on, will be on banking sector liquidity.
02:11 Now liquidity was in deficit for a pretty long time but since December, since the last policy
02:16 happened, things have eased a little bit. Remember that right after the budget the government is also
02:22 likely to spend a little more because they still have to meet their spending target which they will
02:26 achieve by March. So therefore there will be some improvement on the liquidity scenario but we need
02:32 to see what the RBI says it will do. Remember that they have been also conducting variable rate repo
02:37 auctions regularly to maintain short-term liquidity. Now aside from all of this, one important question
02:43 that will be on everybody's mind, every single reporter that I've spoken to is expecting to ask
02:48 this to the RBI governor, that is with regard to what is happening at Paytm and Paytm Payments Bank.
02:53 Now these things are of course not rate related but these are important regulatory decisions.
02:59 Just a few days ago the RBI put severe restrictions on Paytm Payments Bank on conducting future
03:05 transactions. February 29th is the date after which there will be no further deposits allowed
03:10 into Paytm Payments Bank account which puts this large sort of fintech entity in sort of jeopardy.
03:16 So we need to see whether the RBI gives any further clarification, any kind of indication
03:21 as to what they want to do with Paytm. So these are three things, first on the rate trajectory,
03:26 second on the banking sector liquidity and the third on what happens to Paytm going ahead.