.jpg)
The rupee resumed slightly lower at 62.05 per dollar as against the last weekend's level of 62.04 at the Interbank Foreign Exchange market. It recovered to 61.88 per dollar before quoting 61.93 at 1045 hours.
The Reserve Bank on Wednesday hiked key benchmark policy rate by 25 basis points to 6.5 per cent, citing sticky core inflation. This is the sixth time interest rate has been hiked by the Reserve Bank of India (RBI) since May last year, taking the total quantum of hike to 250 basis points. Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) by a majority decided to raise the policy repo rate by 25 basis points and keep a 'strong vigil' on inflation outlook.
Calling the present level of inflation unacceptably high, Reserve Bank of India Governor Y V Reddy on Monday said that the Central bank is ready to take steps to cool prices. "Any decision to act has to carefully assess this extremely complex situation... We have a range of instruments available with us to manage liquidity and we do not hesitate in using them. Liquidity management has to be consistent with monetary policy and with management of aggregate demand," Reddy said.
Equity indices made an emphatic comeback on Friday after falling for seven straight sessions after the RBI hiked interest rates by 50 basis points on expected lines and projected inflation coming under control from January next year. A strong recovery in the rupee added to the momentum, traders said. Overcoming a wobbly start, the 30-share BSE Sensex soared 1,016.96 points or 1.80 per cent to settle at 57,426.92. During the day, it rallied 1,312.67 points or 2.32 per cent to 57,722.63.
Build up inflation rate in the financial year so far was 2 per cent compared to a build up rate of 4.56 per cent in the corresponding period of the previous year. Inflation in food articles as a group rose to 11.08 per cent during the month as against 9.80 per cent in the previous month, mainly driven by exorbitantly high onion prices, the rates of which spiked by over 172 per cent from a year-ago. The annual rate of inflation, based on monthly wholesale price index was at 0.16 per cent in October.
The WPI number follows retail inflation (CPI) data, which had slipped to a record low of 3.78 per cent in July.
In his book, former governor Subbarao says Chidambaram, Pranab were piqued by his tight rate policy.
'They can transition from short to long-duration funds when the yield curve normalises.'
Of the eight RBI governors who have held office since the 1991 economic liberalisation, Bimal Jalan had the longest stint and S Venkitaramanan, the shortest. Current Governor Shaktikanta Das will overtake Bimal Jalan before completing his second term in December, points out Tamal Bandyopadhyay.
Reserve Bank, in its mid term review of the monetary policy on Friday, decided to hike short term policy rate by 0.25 per cent after a gap of two years and ease liquidity by reducing the marginal standing facility rate for banks.
US's terrible political and economic leadership will ultimately cost the dollar its value. India must act early to avoid being dragged down, suggests R Jagannathan.
The Reserve Bank of India kept interest rates unchanged at 8.0 percent on Tuesday as widely expected, staying focused on containing inflation while adopting a more dovish tone in response to the government's call for help to revive economic growth.
In October, CPI inflation was 5 per cent.
The bigger worry is that its effects could linger well into the next financial year.
Elevated food price-led inflation could become a sore point for markets, which they seem to be ignoring at current levels, observe analysts. Retail inflation in India - as measured by the Consumer Price Index (CPI) - came in at a three-month high of 6.52 per cent in January 2023, compared with 5.72 per cent in December and 5.88 per cent in November 2022. The inflation print for February, according to Madan Sabnavis, chief economist at Bank of Baroda, will be critical for the Reserve Bank of India's monetary policy committee.
.jpg)
BSE auto index surged 2%, capital goods, healthcare and oil & gas indices also up.
The MPC states that the 4 external members will have a tenure of four years each.
Interview with former Reserve Bank of India governor by Duvvuri Subbarao.
"Benchmark prime lending rate is revised from 12.75 per cent to 13.75 per cent," the bank said in its filing on BSE. The decision by the largest lender was expected but came days after a host of other lenders including HDFC, ICICI Bank, IDBI Bank, Bank of India, Axis Bank, Canara Bank, and Yes Bank announced revisions in interest rates.
Union Minister Nirmala Sitharaman on Thursday said speaking Hindi gives her 'shivers' and she speaks the language with hesitation.
Rajan's colleague in the ministry, Economic Affairs Secretary Arvind Mayaram, also expressed hope on Thursday that the central bank would vote for growth.
On the present government's 'Make in India' campaign, C Rangarajan, former chairman of the Prime Minister's Economic Advisory Council, says it is important to first ask for whom it is being made.
He has had a productive first year at the RBI -- one which saw, also, India's economic imbalances improve and the unexpectedly strong general election outcome.
It's a classic example of the proverbial banker offering an umbrella when there is little possibility of rain.
The government has extended the term of Reserve Bank of India Governor Shaktikanta Das by another three years upto December 2024, according to an official order.
The government seemed unhappy with Raghuram Rajan's interest rate policy.
Till now, the maximum Bharat Ratnas were awarded in 1999 when four recipients were given the coveted award.
Monetary policy stance to depend on inflation data
There is also a lobby within the bureaucracy that wants to see Rajan's influence curtailed
National auditor says a significant part of NPAs was due to fraud and may never be recovered
'The Indian economy and the Indian financial sector today remain resilient and much better placed.'
'Rate cut should reiterate RBI's commitment in providing confidence to consumers and small business.'
'RBI is already late in addressing inflation pressures.'
Lower inflation, FCNR(B) outflows likely to influence central bank decision
The rupee gained for the second day, climbing 23 paise to a one-week high of 62.07 against the dollar on Wednesday, amid a modest recovery in local stocks and sales of the US currency by exporters and banks.
The size of the hole in today's banking crisis appears to be roughly 10 per cent of GDP.
RBI could opt for a 'deep cut' after winning inflation war, say experts.
India Inc on Tuesday expressed disappointment over the Reserve Bank increasing the key rate by 0.25 per cent and hoped that banks would refrain from hiking lending rates as such a move will scuttle economic recovery.
'The no-rate cut policy and preference to wait for the Budget and clarity on the fiscal front demonstrate RBI Governor Shaktikanta Das is maturing in his new role,' notes Tamal Bandyopadhyay.
