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25th Jan 2022  –   09:43 am

India Pre Budget FY23: Focusing on capex revival

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22nd Jan 2022  –   08:55 am

CPI and IIP January 2022

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Borrowing Liquidity 05 January 2022

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Jackson Hole Response August 2021

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30th Aug 2021  –   02:36 pm
NEWS FEED
WEEKLY PUBLIC POLL

Where do you see rupee heading by December 2022 against dollar?

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UFI 16-Jan-22

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20th Jan 2022  –   07:00 pm

i4Markets Index Dec-21

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07th Jan 2022  –   11:00 am

iD80 Index May-21

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01st Jul 2021  –   00:00 am
CENTRAL BANK ZONE

Reserve Bank of India

In the December MPC minutes members sounded dovish and maintained status quo on policy rates. Accommodative stance was maintained with 5:1 majority.

RBI increased the quantum to be absorbed under 14-day VRRR to INR 7.5tn by December end. We expect RBI to reduce amount absorbed under fixed rate reverse repo auctions and use more variable rate auctions to mop up excess liquidity. Shorter tenor VRRRs will put upward pressure on short end of the yield curve.

We expect RBI to go for a two-step reverse repo hike starting from February 2022.

Federal Reserve

In its last policy meeting in December, the FOMC accelerated the pace of tapering from USD 15 bn per month to USD 30 bn per month. This will ensure that QE ends by March-2022. It also indicated that it could hike policy rates by 75 bps via its 'dot plot' and indicated that inflation pressures could end becoming more persistent than was previously assumed.

In the next policy meeting in January, we expect an unchanged message from the FOMC in which its sticks to the guidance that it provided in December.

We expect the FOMC to end QE by March-2022. This will be followed by 100 bps rate hikes in 2022, 100 bps rate hikes in 2023 and 75 bps rate hikes in 2024. QT could commence from H22022 onwards.

Bank Of England

In its last policy meeting in December, the BoE delivered a hawkish surprise by hiking the policy rate by 15 bps on the back of inflation concerns. It played down the risks from Omicron and indicated that more monetary policy tightening could on the horizon.

We expect the BoE to maintain status quo in its next policy meeting and commit to move towards a tighter monetary policy regime.

We expect a cumulative 50 bps rate hikes over 2022 (May and November). We also see the BoE embarking on a QT by early 2023.

European Central Bank

In its latest policy meeting in December, we see the ECB did the following: (a) indicated that PEPP will end on schedule by March-2022, (b) APP purchases will be increased from EUR 20 bn per month to EUR 40 bn in Q22022 and EUR 30 bn in Q32022 but will revert back to EUR 30 bn from Q42022 and (c) expected inflation to moderate in the medium-term ensuring that policy rates are kept at current levels over 2022-24.

In the next policy meeting in January, we expect a dovish message with an emphasis of keeping policy accommodative to support the recovery.

We expect ECB to end PEPP but continue with its balance sheet expansion in to 2022. No rate hikes are expected over 2022-23 period.

People's Bank of China

The PBOC delivered another 50 bps cut in the RRR in December and cut the one-year loan prime lending rate by 5 bps to 3.8% reflecting ongoing concerns about the real estate sector and the economy.

We see prospect of further liquidity infusions via RRR cuts or OMOs to support the economy as the real-estate sector undergoes a multi-year period of under-performance.

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