RBI maintains accommodative stand, effort are on to limit damage by uncertainties. All rates remain unchanged. It keeps Reverse repo rate unchanged at 3.35%. Also Repo rate unchanged at 4%. MSF & Bank rates also remain the same at 4.25%.
Banks: PSU bank balance sheet are stronger than before. RBI has turned to balancing liquidity. Capacity utilisation is better. Banks will be well advised to further strengthen risk management strategies. We have maintained a constant watch of impact of COVID on banks.
Economy: Investment activity has picked up. Indian Rupee has shown resilience during COVID. “Some loss of growth momentum observed due to global factors, though prospects of agriculture have improved due to good winter crop arrivals.” Governor. The real GDP growth is projected at 7.8% for FY 2022-23. Current account deficit at 2% of
E-rupee can be fully redeemed.
Inflation: “CPI edged higher but at expected lines.” RBI maintains CPI inflation forecast of 5.3 percent for FY22. RBI forecasts FY23 CPI inflation at 4.5 percent. RBI forecasts Q1FY23 CPI at 4.9 percent, Q2 at 5 percent, Q3 at 4 percent and Q4 at 4.2 percent. CPI is in-line with expectations and food prices easing to add to the optimismHardening of Fuel prices are a concern though Coal remains stable. Some softening of core inflation expected.