The biggest reading from RBI's April 5 monetary policy is that any chances of rate cut from the RBI in the immediate future look unlikely till inflation eases to 4% levels.
Raising concerns over the impact of the reduction in fuel prices on inflation, the RBI governor said the “Two months ago the elephant in the room was inflation, and that elephant has now gone for a walk in the forest and we hope it remains there.”
Das highlighted that till inflation eases to the 4 percent mark, there is no rate thinking happening.
Here are the other takeaways from this speech
RBI has allowed distribution of central bank digital currency, or e-rupee, to retail users through non-bank payment system operators. "It is proposed to make CBDC-retail accessible to a broader segment of users by enabling non-bank payment system operators to offer CBDC wallets," Das said.
RBI will be reviewing the liquidity coverage ratio framework for banks, Das said in his monetary policy address on Friday. The regulator will soon issue a draft circular for stakeholder comments on this.
RBI will introduce a mobile app for its retail direct portal, said Das. They function just like any investment app. The online portal provides retail investors the convenience of investing in Central government securities, State Government securities and Sovereign Gold Bonds through digital channels.
Announcing the current fiscal's first bi-monthly monetary policy of the RBI, Das said, “Deposit of cash through cash deposit machines (CDMs) is primarily being done through the use of debit cards. Given the experience gained from cardless cash withdrawal using UPI at the ATMs, it is now proposed to facilitate deposit of cash in CDMs using UPI.”
Das said Net FPI inflows stood at $41.6 billion, compared with outflows in FY22, FY23. Current Account Deficit narrowed significantly in first three quarters of FY24. India continues to remain the largest recipient of foreign remittances.
RBI will continue to constructively engage with financial sector entities, said Das Financial stability is a joint responsibility of all stakeholders, he said.
In FY25 inflation is seen at 4.5%. International food prices remain benign, output of key vegetables remain key monitorable owing to weather forecasts and climate shocks pose upside risk for domestic, international food prices.
Real GDP growth for FY25 is projected at 7%, with Q1 at 7.1%, Q2 at 6.9%, and 7% in Q3 and Q4, said Das. Prospects of investment activity remain bright because of persisting and robust govt capital expenditure, Healthy balance sheets of banks and corporates