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.
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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 »
The Reserve Bank of India, the country’s central bank, has been busy this month with all kinds of efforts to tighten liquidity and make currency speculation more expensive.
But the big ticket announcement comes on Tuesday when it sets its repo rate – the rate at which banks borrow from the RBI – and its cash reserve ratio – the proportion of deposits that banks must have in hand as cash. 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 »
When Indian policy makers held rates steady last week, their main concern was over the current account deficit and the weakening rupee.
But there is another group of people who will be watching those two numbers closely – who just happen to be the same folk that have been quietly helping reduce the current account deficit for a while now: non-resident Indians (NRIs) with deposits in Indian banks. 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 2013. Continue reading »
The Reserve Bank of India has cut its repo lending rate by 25 basis points to 7.25 per cent, in line with expectation.
But in a surprisingly hawkish move, it warned that room for further reductions was “very limited”.
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Inflation is finally slowing in India – good news for consumers, and for policy makers looking for room to cut rates.
In March, annual inflation based on the Wholesale Price Index came in at 5.96 per cent, the slowest rate in years, down from 6.84 per cent a month earlier. Continue reading »
The Reserve Bank of India cut its repo lending rate by 25 basis points on Tuesday to 7.5 per cent a year, meeting analyst expectations.
The cut follows a 25 basis point reduction in the rate in January, the first since April 2012. Though analysts have been forecasting further cuts in the coming months, the RBI has said there is limited room for further action. Continue reading »
India’s industrial production increased in January – only the fourth month out of the past ten to see positive growth.
The index of industrial production was up 2.4 per cent year-on-year this January, double the 1.2 per cent rate forecast in the market. But one month’s growth doesn’t mean recovery is imminent.
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