RBI monetary policy meet 2024 live updates: Reserve Bank of India watchers are focused on governor Shaktikanta Das’s policy decision, with most expecting interest rates to remain unchanged. Recent global central bank actions, including the Bank of England’s rate cut and the Bank of Japan’s hike, add to the anticipation. Today’s decision will be the last for the current monetary policy committee before their term expires in October. Although inflation in June was above the RBI’s 4% target due to high food prices, the government’s revision of the consumer price index might ease future spikes. Bloomberg Economics predicts a 25-basis point cut. The RBI faces internal pressure for policy adjustment, with some MPC members advocating for rate cuts. Despite global trends, Das emphasises India’s independent policy, supported by strong reserves. Economists foresee a shift to a neutral policy stance. The RBI’s liquidity management, post-JPMorgan bond index inclusion, will also be crucial in this decision.
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RBI monetary policy meet 2024 updates: Wall Street slides as bond yields rise and dollar strengthens
Wall Street equity indexes ended lower on Wednesday following a volatile session, with the S&P 500 and Nasdaq slipping after a weak US 10-year Treasury auction. The Dow Jones dropped 0.60%, the S&P 500 fell 0.77%, and the Nasdaq decreased by 1.05%. Meanwhile, Treasury yields increased, with the 10-year yield rising to 3.958% and the 30-year to 4.2579%. The dollar strengthened against the yen following Bank of Japan deputy governor Shinichi Uchida’s comments on interest rates. Oil prices climbed due to a large draw in US crude stockpiles and potential Middle East tensions, despite concerns over weak demand in China. The yen weakened, and the dollar index gained 0.2%.
RBI monetary policy meet 2024 updates: RBI’s ongoing efforts to manage liquidity
The Reserve Bank of India (RBI) is actively managing excess liquidity in the banking system through strategic bond sales and reverse repo operations. In recent weeks, the RBI has resorted to selling bonds to absorb surplus liquidity, which has reached a one-year high due to the central bank’s foreign exchange market interventions and post-election government spending.
To address this, the RBI has conducted variable reverse repos to withdraw shorter-duration liquidity, ensuring stability in the financial system. This proactive approach is aimed at preventing the weighted average call rate from diverging too far from the repo rate, a move that helps maintain market equilibrium.
Despite not having a stated preference for a specific liquidity surplus or deficit level, the central bank’s recent activities highlight its commitment to balancing liquidity conditions. This ongoing effort is crucial as India navigates its recent inclusion in the JPMorgan bond index, which has added another layer of complexity to liquidity management.
RBI monetary policy meet 2024 live updates: Impact of bond index inclusion on liquidity
India’s inclusion in JPMorgan’s bond index has raised questions about the RBI’s liquidity management. Recent bond sales by the central bank have surprised investors and contributed to market volatility. As the banking system experiences high liquidity due to forex interventions and government spending, the RBI’s actions, such as bond sales and reverse repos, aim to balance liquidity conditions and stabilise market rates.