In its bi-monthly monetary policy review this week, the central bank is expected to imply a gradual unwinding of emergency liquidity measures implemented during the pandemic while keeping key interest rates steady, according to sources.
Stocks that are rate sensitive, such as autos, banks, and real estate, will be scrutinized. Tomorrow, IT major TCS will release its results for Q2FY22, kicking off the September quarter earnings.
The National Company Law Appellate Tribunal on Thursday ordered the NCLT to give Zee Entertainment Enterprises Ltd (ZEEL) “fair and sufficient chance” to respond to Invesco’s request for a meeting of the company’s shareholders. The appellate panel stated in a fifteen-page judgment that the National Company Law Tribunal made an “error” by not allowing ZEEL ample time to respond to Invesco’s claim.
What Can We Expect From the Reserve Bank
The Reserve Bank of India will release its bi-monthly monetary policy decision this week. According to sources, the central bank is expected to retain interest rates at historic lows due to Omicron fears. The RBI’s monetary policy committee (MPC) may potentially decide to hold the key lending rate at 4%.
The RBI is projected to raise its reverse repo rate early next year and its repo rate the subsequent quarter, as per experts. There are growing predictions that the RBI will raise the reverse repo rate at the December MPC meeting, narrowing the repo-reverse repo rate corridor.
However, the experts noted that the new pandemic variation Omicron has once again thrown the global and Indian economies into disarray. According to them, the Reserve Bank will likely defer boosting its benchmark borrowing and lending rates as it adopts a cautious stance in the wake of the Omicron crisis.
Further Key Takeaways
The reverse repo rate, on the other hand, is projected to remain at 3.35 percent, but some economists expect a minor increase as the central bank attempts to close the difference between lending and borrowing rates to pre-pandemic levels.
It’s worth noting that the RBI cut the reverse repo rate more than the repo rate, resulting in a 65-basis-point spread between the two rates, up from 25-basis-points before the pandemic. Given the unknowns surrounding the new Omicron variant’s impact on the economy, some experts believe the RBI should take a wait-and-see strategy despite inflationary pressures.
India’s economy grew 8.4% in the September quarter from a year earlier as pandemic cases decreased, but economists said the disruptions from the new version threatened to stall the recovery. Inflation has remained within the RBI’s target range of 2-6 percent thanks to national and local governments’ reductions in fuel taxes, but analysts predict that due to damage to perishable food goods, inflation may rise again.
Frequently Asked Questions (FAQs)
Q1. What is the monetary policy of the Reserve Bank of India (RBI)?
The Reserve Bank of India (RBI) formulates monetary policy, which is concerned with the country’s monetary affairs. The policy entails steps made to control the amount of money in circulation, as well as the availability and cost of credit in the economy.
Q2. Is there a distinction between fiscal and monetary policy?
The acts of central banks to achieve macroeconomic policy objectives such as stability of prices, full employment, and stable economic growth are referred to as monetary policy. The federal government’s tax and spending policies are referred to as fiscal policy.
Q3. What are monetary policy’s objectives?
The goal of monetary policy is to promote job creation, stability of prices, and a minimal rate of interest. The central bank can maintain stable prices by adopting an effective monetary policy, thereby enabling conditions for long-term economic growth and maximum employment.