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RBI gives cash in hand, but not a rate cut

The Reserve Bank of India disappointed those who were looking to it, to complete a troika of measures to lift up investor sentiment. Last week, the European Central Bank said it would buy sovereign euro bonds without any limit, and the US Federal Reserve said it would launch a quantitative easing program that would continue for as long as economic conditions remained weak. Then, the Indian government followed up with a series of reforms, including cutting diesel prices and allowing FDI in a few high profile sectors.

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RBI’s credit policy stands still

Reserve Bank of India

The Reserve Bank of India announced its third quarter review of the monetary policy today, disappointing the rate-cut hopefuls by leaving all key benchmarks unchanged. In the past few months, the central bank has provided enough leeway, by reducing interest rates and adding to cash in the banking system, for banks to start lending again.

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RBI pours cash, govt readies for more goodies for banks

India’s economic actions today resembled that of the US today: concerted action to restore confidence in the monetary system. Strange, that the system should have been exposed to be so weak when we supposedly had none of the rot that had permeated the US banking system. Makes one really wonder what went wrong. Maybe we will get to know sometime; at present all one knows is that there is a liquidity crunch, which is being blamed on various factors, ranging from rising credit demand, drying overseas fund markets, FII outflows and whatever else. Continue Reading →

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Interest rates to go up, repo rate and CRR hiked by RBI

RBI’s quarterly policy announcement would have normally continued with its policy stance over the past few months. But anticipation of a change or a pause had built up, given the government winning the trust vote, and inflation easing (from 11.91% to 11.89%, how does that constitute easing). The changed political and supposedly economic environment would give it legroom to pause interest rate hikes.

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