India interest rates

As the monsoon rains lash down on the streets of Mumbai, traffic has slowed to a crawl. Just last week, India’s trademark black and yellow taxis would speed down Marine Drive, the city’s seaside boulevard, but now the road is clogged as a jumble of jalopies and private cars trundle past potholes brimming with water.

Just the opposite is true of India’s car market: sales have started to accelerate. In the month of June, total car sales jumped 14.76 per cent year-on-year to 160,232 units, according to data from the Society of Indian Automobile Manufacturers (SIAM) published earlier this month.

While the evidence is too fragmented to make a compelling case for a sustainable upturn in car sales, some analysts are optimistic. The thumping triumph of Narendra Modi, prime minister, in May’s national election – which has also sparked an impressive stock market rally – may be helping to infuse consumers with a sense of wellbeing, analysts said. Continue reading »

Raghuram Rajan, governor of the Reserve Bank of India (RBI), held the repo lending rate steady at 8 per cent on Tuesday as the markets expected.

As Rajan said himself, the only surprise was the lack of a surprise. But there was plenty more in the governor’s speech that grabbed our attention. Continue reading »

Soothing words are heard from finance minister Palaniappan Chidambaram on Monday around the strength of the Indian economy and the fiscal and current account deficits. In a separate vein, Bollywood stars are lending some lustre to the election campaign, but how effective will they be if they win a seat and embark upon the workaday business of governing a constituency?

Ahead of central bank governor Raghuram Rajan’s monetary policy announcement on Tuesday, we look at what he is likely to say and do.

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It is ironic that Raghuram Rajan, governor of the Reserve Bank of India, will announce India’s latest monetary policy decision on Tuesday – April Fools’ Day.

Since taking the helm at the central bank last year, Rajan has repeatedly surprised the markets by holding the repo lending rate steady when we all expected a hike and giving us a hike when we were sure no change was on the cards. In the midst of a pre-election rally, what can we expect now? Continue reading »

Surprise! On Wednesday, India’s central bank kept the repo lending rate steady at 7.75 per cent and the cash reserve ratio at 4 per cent.

That went against the expectations of investors, analysts and economists who thought Raghuram Rajan, the governor of the Reserve Bank of India, would raise interest rates once again to crack the whip on inflation. Continue reading »

As expected Raghuram Rajan, the new governor of the Reserve Bank of India, has confirmed beyond all doubt that he’s all hawk.

The central bank raised the policy repo rate 25 basis points on Tuesday to 7.75 per cent. At the same time, it cut the marginal standing facility (MSF) – the rate at which banks borrow funds overnight from the RBI – by 25bp to 8.75 per cent. Continue reading »

Raghuram “Rockstar” Rajan, the new governor of the Reserve Bank of India, proved he meant business last month when he surprised markets and raised the repo rate by 25 basis points to 7.5 per cent.

His next policy decision comes on Tuesday and many analysts are expecting another 25bp hike. So what are the signs he’ll be looking for? Continue reading »

After long discussion, a battle in India’s government between the imperatives of boosting the economy and supporting the currency has been decided.

Late on Monday, the Reserve Bank of India (RBI) announced a package of measures to tighten liquidity. It hopes to stem the depreciation of the rupee and prevent its current account deficit from spiralling out of control – but it has done so at the risk of limiting India’s already meager economic growth. Continue reading »

It’s a problem that many countries are experiencing: the central bank cuts rates, but the banks aren’t passing the reductions on to borrowers. What can be done to make more credit available?

In India, finance minister Palaniappan Chidambaram is trying the direct route. On Wednesday, he met with the heads of public sector banks and requested they reduce lending rates. Will they? Continue reading »

With sluggish growth, industrial production down, car sales slowing and manufacturing confidence fading, what can the Reserve Bank of India come up with?

The RBI has a decision to make next week – can it cut rates? It will be keen to jumpstart the economy. But the sharp depreciation of the rupee this week could force the central bank to hold off its plans. Continue reading »

Ratings agency S&P has warned that the chances of India’s sovereign credit being downgraded to junk is more than one in three, as the economy battles with unsustainable current account and fiscal deficits.

But foreign institutional investors (FIIs) see reasons for cheer as growing inflows send Indian equity markets soaring. On Monday, India’s benchmark Nifty index surged 31 points to 6,229.45, its highest since November 2010. The Sensex too gained 163 points to 20,443.62, its highest since January 2011. Both indices have gained in every session in the past week. What’s going on? And will this rally last? Continue reading »

India’s annual wholesale price inflation rate dropped to 4.89 per cent in April, a 41-month low.

It was sharply down on the 5.96 per cent recorded in March and well below expectations, with an average forecast of 5.5 per cent in a Reuters poll of analysts. Continue reading »

India’s industrial production grew 2.5 per cent year-on-year this March, against an average forecast of 2.4 per cent in a Bloomberg poll.

The data follows growth of 0.5 per cent in the month of February, a figure that was revised downwards from 0.6 per cent, and comes after the Reserve Bank of India (RBI) has slashed interest rates three times since the beginning of 2013Continue reading »