INSUBCONTINENT EXCLUSIVE:
RBI monetary policy: Repo rate is the rate at which the RBI lends short-term funds to commercial banksRBI Governor Urjit Patel-led Monetary
Policy Committee announced a hike of 25 basis points in repo rate in its monetary policy statement on Wednesday
This is the third bi-monthly statement by the central bank for financial year 2018-19
Repo rate is the key rate at which the RBI lends short-term funds to commercial banks
In its last policy review, the RBI had announced a 25-basis-point hike in the repo rate while maintaining its policy stance at 'neutral'
The June rate hike marked the first in more than four years
Since then, inflation has moved higher, further up from the RBI's target of 4 per cent over the medium term
The RBI's commentary on the rupee, industrial production, economic growth and crude oil will also be monitored by experts
Stock markets ended their record-setting spree with the BSE Sensex closing 84 points, or 0.23 per cent, lower at 37,521
That marked the first lower closing for the Sensex after eight sessions of gains
The NSE Nifty shed 10 points to settle at 11,346
Vedanta and Tata Steel were the top laggards - closing between 2.5 per cent and 1.7 per cent lower - on the 50-scrip Nifty index
(Read more)Here are the economic growth numbers it expects:7.5-7.6% in first half of 2018-197.3-7.4% in second half7.5% in first half of
fiscal year 2019-20The central bank retained its GDP growth projection for the current financial year citing "evenly balanced"
"The tone of policy seems slightly on the hawkish side despite RBI tinkering only marginally with its second-half inflation projection
The RBI continues to reiterate long-standing risks to inflation and in particular oil prices remain a key risk," said Shashank Mendiratta,
India economist, ANZ Bank
(What experts say on RBI policy)Reserve Bank of India's move on repo rate - the key interest rate at which it lends short-term money to
commercial banks - was in line with predictions by 37 of 63 economists in a Reuters poll last week "The hike was expected, but what is
surprising is the stance has remained 'neutral'
We were expecting that since this is the second consecutive hike in two policies, the stance would be changed to 'tightening'," said Anagha
Deodhar, economist, ICICI Securities
"They have not quantified the impact of MSP (minimum support prices) on inflation, or when MSP will start affecting inflation - whether it
will be in October or earlier than that
I would have liked to see some clarity on that." (Read more)The Reserve Bank of India expects the monsoon progress to boost demand in the
rural economy on the back of increase in farmers' income
second half of JuneCumulative rainfall up to July 31 was 6% below long-period average (LPA)Overall performance of the monsoon augurs well
for food inflation in medium-termMonsoon progress, sharper-than-usual increase in minimum support prices of kharif crops seen boosting rural
carefully monitored in context of CPI components such as paddyMonetary Policy Committee took note of rise in inflation: RBI Governor Urjit
6.5% Among other reasons, economists have cited the hike in minimum support price (MSP).The government last month cleared minimum support
prices for 14 kharif crops, a move set to cost nearly Rs.15,000 crore
That marked a move further away from the central bank's medium-term target of 4 per cent
index, Nifty 50, were Hindalco Industries, Vedanta, Eicher Motors, Tata Steel and Maruti Suzuki India, trading with losses of around 1-2 per
cent each.The policy statement will be released by the central bank at 2:30 pm
The current 'neutral' stance adopted by the RBI in October 2016 helps it move either way on the benchmark interest rates
A switch to a 'hawkish' would mean more aggressive action on key rates going forward
The broader NSE Nifty50 was trading at 11,341.75, down 0.13 per cent or 14.75 points, with 28 stocks trading in red in the afternoon trade
Nifty Bank was also down 162 points or 0.58 at 27,602.15
SP BSE Sensex was trading at 37,517.69, down 88.89 point or 0.24 per cent, after registering a record high of 37,711.87 in the early day
