Skip to main content

RBI holds policy rate steady at 6.75%

As expected by economists and markets, the Reserve Bank of India on Tuesday held its repo rate steady at 6.75%, having cut the policy rate by as much as 75 basis points in three tranches earlier this year. Repo, or repurchase, is the rate at which the central bank lends money to commercial banks.
Most predictions had said the RBI would hold the rate at its bimonthly policy review Tuesday, arguing that Raghuram Rajan would likely wait until the US Fed makes a move on raising interest rates there; some even suggest that the RBI Governor might hold off of any more rate cuts until the next Budget.
India’s economic growth, however, continues to lag behind the expected curve. For the quarter ended September 2015, India’s GDP grew at 7.4%, bumped up by a manufacturing boost, but made it all but impossible that the country would achieve an 8% rate of growth.
Other economic data has also been lackadaisical;. Core sector growth on Monday came in at 3.2% for the month of October, unchanged from the previous quarter and down steeply from 9% last year.
The Index of Industrial Production in September grew at a slower-than-expected pace of 3.6%, held back by slower expansion in the mining sector.
But retail inflation, which the RBI uses as a key variable to decide on interest rate policy, has also been inching up: it grew to 5% in October from 4.4% in September, largely due to a 33.5% jump in the price of pulses, a staple in most parts of the country, a below-average monsoon that has created large pockets of drought, and despite a global decline in commodities prices. However, it remained within the RBI’s target of 6% by January 2016.
The creeping rise in the Consumer Price Index, used to measure retail inflation, also made it less likely that the central bank would consider a policy rate cut at this time of the year.

Comments

Post a Comment

Popular posts from this blog

Wizard of Dalal Street: Govind Parikh's investment mantra

Wizard of Dalal Street: Govind Parikh's investment mantra Govind Parikh of Govind Parikh Securities says selling right is more important than correct buying. He says it is necessary to keep a lot of cash. "We keep an average 10 percent cash in our portfolio," he says I like to buy things in a bad market. Additionally, don't look current cash flow, concentrate on future cash flows — that is what  I look at," says Govind Parikh of Govind Parikh Securities. He advises investors to buy good quality stocks when the market crashes. While sharing his investment philosophy with ace investor Ramesh Damani, on the Wizards of Dalal Street, Parikh says management integrity is very important when deciding which stock to bet on. He tells investors not to buy stocks impulsively. According to him, selling right is more important than correct buying. He says it is necessary to keep a lot of cash. "We keep an average 10 percent cash in our portfolio," he says. He al...
2 comments
Read more

Bank Nifty

Bank Nifty Bank Nifty is a Sell at Current Levels with a Stop Loss of 12,750 Once Below 12,400 the next major Support shall be only 12,000 Levels so a person can go short is bearish or buy putt if moderately bearish . 
7 comments
Read more

Budget 2018: Mega health plan to cost Rs 1 lakh crore

The mega healthcare plan for the poor, as announced in the Budget, will cost about Rs 1,00,000 crore annually and curtail states' autonomy to design their own policies in the sector, says a research paper, authored by a professor at economic think tank NIPFP. The paper's estimate is 10 times higher than the one made last week by Niti Aayog adviser Alok Kumar, who had said that the National Health Protection Scheme (NHPS) will cost around Rs 10,000-12,000 crore annually. National Institute of Public Finance and Policy (NIPFP) Assistant Professor Mita Choudhury said in the paper -- 'The National Health Protection Scheme in the Union  Budget 2018 : Is it in the Right Direction?' -- that resource requirements for implementing NHPS are likely to be very high. Not only would such a scheme impose a heavy burden on both the Union and the states' exchequers, it will also curtail states' autonomy to design their own policies in a sector that is constitutionally ma...
Post a Comment
Read more