Monetary Policy Announcement and its broader implications

The Monetary Policy announced by the RBI on 08th February was largely along expected lines. One needs to understand the context in which the policy was announced. On the one hand, the Indian economy is just about emerging from the cash shortfall caused by the demonetization. On the other hand, inflation continues to stay under control and IIP and core sector are showing green-shoots of recovery. The global scenario is the bigger question mark. BREXIT is raising serious questions over the sustainability of the common currency model while the UK still does not have clarity on its trade strategy post BREXIT. Above all, the US is increasingly making protectionist noises even as Indian companies are already under pressure due to recent measures like H1-B visa restrictions, immigration checks and a likely border tax on outsourcing. It is in this highly charged atmosphere that the Monetary Policy was announced by the RBI… Continue reading

RBI chooses to be Cautious inspite of Lower CPI Inflation

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Key Takeaways from the CPI numbers…

  • CPI inflation for the month of November 2016 came in lower at a 2-year low of 3.63%. This compares very favourably with the 4.20% inflation reported in October 2016 and a much higher 5.41% CPI inflation reported in November 2016.
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How India has kept its CPI & WPI inflation under control

Has India finally tamed the inflation demon?

The CPI and WPI numbers that came in during the week were a whiff of fresh air. CPI inflation at 4.20% is now already well below the RBI comfort level of 5%. The WPI inflation at 3.30% is also showing signs of tapering. There are broadly 4 issues to understand… Continue reading

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