Posted at 2:18 PM , on December 1, 2015
The Credit policy on December 01st was announced in the background of mixed macroeconomic signals. On the one hand the possible Fed rate hike is likely to make the dollar stronger. On the other hand, the inclusion of the Chinese Yuan into the SDR basket on 30th November means that the Yuan will strengthen due to increased demand for the currency. Both are likely to influence capital inflows into the US and China positively. The RBI therefore needs to ensure that India’s capital flows do not get competitively outdone. This will be the primer driver for the RBI. Continue reading
Posted at 7:21 PM , on September 29, 2015
If there was one way to describe the RBI policy announced on 29th September 2015, it was a policy that exceeded expectations by a margin. Markets were expecting a 25 bps rate cut and preparing for a zero bps rate cut with a hawkish tone. What the markets actually got was a pleasant surprise! The RBI cut rates by a full 50 basis points and did not rule out further rate cuts, thus keeping the tone as dovish as possible. Also there were some more items for the markets to rejoice.
Posted at 6:21 PM , on July 20, 2015
The Fed rate hike now looks closer and surer than originally anticipated. Janet Yellen had identified 3 critical factors which could impact the decision to hike rates. She called for a pick-up in GDP growth, fall in unemployment to 5% and inflation above 2%. The GDP has surely shown signs of picking up in the US. The rate of unemployment has been falling consistently since 2009 and is now close to 5%. Inflation is still below 2% due to the effect of cheap oil, but that may not be a sustainable rate. If the recent statements of Janet Yellen are to be taken at face value, then a rate hike may actually come as early as September this year. Continue reading