RBI Policy: MPC Expected To Hold Rates | NDTV Profit - video Dailymotion

#RBI #MPC expected to hold rates for the sixth time. What are the economists expecting? Vishwanath Nair brings you the details from RBI headquarters.

Transcript

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.