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Highlights of RBI Monetary Policy and Market Performance
The Reserve Bank of India (RBI) governor Shaktikanta Das addressed a press conference today and this was the second bi-monthly Monetary Policy Committee (MPC) meeting for this fiscal year. Governor Shaktikanta Das announced the MPC's decision after it concludes its three-day meet on June 4, 2021.
Highlights of RBI press conference:
- RBI MPC Keeps Rates Unchanged
RBI MPC keeps repo rate unchanged at 4%, reverse repo rate at 3.35%. This is the sixth time in a row that RBI has kept the benchmark rates unchanged. Experts also earlier anticipated that RBI is likely to keep the policy rates unchanged and maintain accommodative stance amid the growing uncertainty over COVID-19 pandemic.
Source: Media Reports, RBI
- MPC to Continue with Accommodative Stance:
The RBI's Monetary Policy Committee (MPC) has decided to continue with accommodative stance until necessary to mitigate impact of COVID-19. The Marginal Standing Facility (MSF) rate and bank rates remain unchanged at 4.25%.
- FY22 GDP Forecast Reduced to 9.5%:
RBI MPC reduced FY22 GDP forecast to 9.5% from earlier estimate of 10.5%. The Q1FY22 GDP forecast has been slashed to 18.5% from earlier estimate of 26.2%.
- RBI Forecast Normal Monsoon:
According to Governor, forecast of normal monsoon and resilience of agriculture and farm economy will provide tailwinds to growth revival.
- Operation Under G-SAP 1.0 Will Conducted on June 17:
Primarily, the G-SAP move is aimed at supporting the bond markets which also results in softening of corporate bond yields. The Reserve Bank of India (RBI) Governor Shaktikanta Das announced that another round of Government Securities Acquisition Program (G-SAP 1.0) worth Rs 40,000 crore will be conducted on June 17. Additionally, G-SAP 2.0 of Rs 1.2 lakh crore will be conducted in Q2 FY22. Of the additional round under G-SAP 1.0, Rs 10,000 crore would constitute purchase of state development loans (SDLs).
- CPI Inflation:
RBI says, CPI inflation is projected at 5.1% in FY22. 5.2% in Q1; 5.4% in Q2; 4.7% in Q3; and 5.3% in Q4 with risks broadly balanced.
- FOREX:
India’s foreign exchange reserves touches $600 billion. Formal announcement in due course. Later today, we will see it at $598 billion, RBI Governor.
- Big measures for MSMEs
Special liquidity facility of Rs 16,000 crore for MSMEs via SIDBI For 1-year at repo rate
Exposure Threshold Under Resolution Framework 2.0 Increased to Rs 50 crore from 25 crore for MSMEs
- On-tap Liquidity Window for Contact-intensive sectors:
The Reserve Bank of India (RBI) on Friday announced creating a special liquidity window of Rs 15,000 crore with a tenor of 3 years at the repo rate to provide liquidity support to the contact-intensive sectors hit by Covid-19.
The special liquidity window encourages banks to provide fresh lending support to hotels, restaurants, tourism, aviation ancillary services, and other services including private bus operators, car repair services, rent-a-car service providers, event/conference organizers, spa clinics, and beauty parlours/saloons.
Market Performance:
Nifty 50 index dropped 64 points today
Below is the performance of Sectoral Indices
Indices |
% Change |
- 1.00 |
|
+ 0.83 |
|
- 0.22 |
|
- 0.36 |
|
+ 0.03 |
|
+ 1.02 |
|
+ 1.35 |
|
- 0.09 |
|
- 0.16 |
|
- 0.81 |
|
+ 0.48 |
Source: NSE
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Disclaimer: The above report is compiled from information available on the public platforms.
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