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Setting the stage for RBI

Setting the stage for RBI
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First Published: Mon, Oct 24 2011. 12 37 PM IST

Updated: Mon, Oct 24 2011. 12 37 PM IST
The central bank has raised its key policy rate 12 times since March 2010, from 3.25% to 8.25%, but still hasn’t been able to tame inflation which continues to rule above 9%. Meanwhile, the tight money policy has taken its toll on growth. In previous policy reviews, the Reserve Bank of India made it clear that inflation is enemy No.1 and it was ready to sacrifice growth in the world’s 10th major economy to fight persistently high inflation. Time is not ripe to change the stance of the policy, but will the central bank press the pause button and wait and watch before the next step? Or will it go for yet another rate hike? If indeed that happens, are we close to the end of the rate hiking cycle?
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Inflation
Both general and food price Inflation are above the RBI’s tolerance level…
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Policy Rates
…despite the central bank raising benchmark rates 12 times since March 2010…
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PMI
…which has hurt sentiment..HSBC India Manufacturing Purchasing Managers’ Index
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Cement
…and hit croproate India’s expansion plans…
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Car Sales
…as well as consumer spending …
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10-year Bond Yield
...as market rates are getting more expensive...
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GDP
...which, in turn, has hurt economic growth...
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Credit Growth
...but, surprisingly, bank credit growth holds on...
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IIP
...though the erratic industrial production figures show signs of corporate strain...
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Rupee
...even as the European crisis has pressurized the rupee, increasing concerns of ‘imported inflation’...
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Trade
...despite global concerns of a slowdown, trade figures are reflecting no sign of strain...
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FIIs
...even a foreign institutional investors are getting more impatient...
Source: RBI, Bloomberg, Sebi
Graphics by Ahmed Raza Khan/Mint
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First Published: Mon, Oct 24 2011. 12 37 PM IST