India’s inflation shows a mixed trend, with factory-made products becoming expensive, while primary inflation has moderated. That makes it difficult for the RBI to stop its rate hike juggernaut.
India’s latest inflation data shows food inflation at just under 10%, much above the 7% range it was hovering over. Non-food inflation is steady at 15%. Not the news you wanted the RBI to hear.
D Subbarao will remain RBI governor for 2 more years, a sensible decision by the UPA government as his experience in navigating the global financial crisis of 2008 is invaluable at this juncture. The fight against inflation will continue.
The railway budget does more of the same thing, keeping fares unchanged, promising an increase in investment, more trains, more rolling stock and then failing to keep last year’s promises.
The RBI disappointed market hawks who projected a 0.5% increase in rates, as it appears to have left the job of tightening to the government and banks.
The Reserve Bank of India hiked the cash reserve ratio by 75bps but left benchmark rates unchanged, trying to keep inflation check without threatening the recovery by sending interest rates up
Primary inflation has increased to 11%, against 10% last week. Rising prices and the RBI’s growing concern may see some policy changes in the near future.
October’s inflation has jumped from the previous month’s level of 0.5%. This trend will continue as the base effect has ended, November will see WPI at about 3%.
A sharp pick-up in economic growth is visible in June 2009. Metals, capital goods, and automobiles did well. The only dull spot is stagnation in the output of items used for daily consumption.
Tata Motors is seeking to make use of JLR’s rising cash flows by leveraging its balance sheet, and refinance existing debt and potentially lower interest costs too.
State Bank of India’s reaction to the credit policy was swift, in a move which will see short term deposit rates spike and all loans will become expensive.
