Monetary Policy 2012-13
Monetary Policy 2012-13
A gamble on growth
Banker’s Trust | Tamal Bandyopadhyay
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Tamal Bandyopadhyay is Mint Deputy Managing Editor in Mumbai
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Interview | D. Subbarao : We are not ruling out a rate increase
By Tamal Bandyopadhyay & Joel Rebello
Reserve Bank of India (RBI) governor D. Subbarao said in an interview that the decision to cut the policy rate by 50 basis points (bps) was taken based on current data and is a strong signal to banks to cut loan and deposit rates. In future, all options are open, including further rate cuts or even a hike, depending on inflation-growth dynamics.
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Quick Edit | Crossing the line
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A surprise from RBI
By Anil Padmanabhan
Well, RBI just surpassed expectations and delivered a 50 basis cut in the repo rate. So the obvious question is whether this would spark the growth revival and an end to the bad run of the last two years?
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Anil Padmanabhan is Deputy Managing Editor of Mint
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A strong signal to cut lending rates
By Sonal Varma
The Reserve Bank of India’s (RBI’s) surprise 50 basis points (bps) cut sends a strong signal to banks to reduce their lending rates as growth takes policy priority over inflation. To a large extent, RBI has front-loaded its rate cuts, which is prudent, given the lags in policy transmission. The question is, “What’s next?" A number of factors argue against further substantial policy easing.
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The author is executive director and India economist, Nomura Financial Advisory & Securities India Pvt. Ltd
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RBI springs surprise, cuts repo by 50 bps
By Dinesh Unnikrishnan & Anup Roy
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Central bank playing with fire
By Jahangir Aziz
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The author is India chief economist, JPMorgan Chase.
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Focus on the term structure of rates
By Srinivas Varadarajan
Ten-year government bond yields hit a high of 14% in 1996 and dropped to 5% in 2005. Currently at 8.4%, they are at an inflection point. Despite the 50 basis points (bps) rate cut, I see structurally high long-term rates. A couple of reasons drive this view.
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The author is principal—India, Mount Nathan Advisors
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There is scope for a further 50 bps cut
By A. Prasanna
The central bank delivered a big surprise to the financial markets by cutting the repo rate by 50 basis points. The action was clearly at odds with the tone of Monday’s macroeconomic review and the March mid-quarter review statement. Based on these documents, the common perception was that the Reserve Bank of India (RBI) was quite concerned about inflation risks and would, therefore, proceed cautiously in cutting policy rates. One basis point is one-hundredth of a percentage point.
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The author is chief economist, ICICI Securities Primary Dealership
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Central bank still worried about prices
By Anup Roy & Dinesh Unnikrishnan
The Reserve Bank of India (RBI) on Monday cautioned that inflation in Asia’s third largest economy will remain sticky in the current fiscal and chances of any significant moderation are low, even as it expects a modest recovery in growth.
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Not much room for RBI to cut rates
By Niranjan Rajadhyaksha
The Indian central bank could announce a small rate cut on Tuesday, as a peace offering to the finance minister as well as a signal to the financial markets, but that will leave it with even less wiggle room through the rest of the fiscal year. It seems very unlikely right now that we will see more than 75 basis points of cumulative cuts over the next 12 months. So Subbarao will have to make his moves carefully.
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Niranjan Rajadhyaksha is Executive Editor of Mint
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A cut without conviction?
Banker’s Trust | Tamal Bandyopadhyay
Most economists expect the Indian central bank to cut its key rate, for the first time in three years. Subbarao will probably oblige them, but RBI doesn’t seem to be fully convinced as yet that inflation will stay low for long, even though the risks to growth have increased.
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Tamal Bandyopadhyay is Mint Deputy Managing Editor in Mumbai
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What has changed since the last monetary policy review?
Mark to Market | Manas Chakravarty
First, this is what the central bank said about the global outlook: “While the recovery in the US has been progressing, economic activity in the euro area has contracted… Sluggish global economic activity, uncertainty in the euro area and rising crude oil prices will hamper growth prospects of EDEs (emerging and developing economies)." That environment hasn’t changed much, except that recent data out of the US shows the recovery there is still weak. On the positive side, oil prices haven’t gone up any further. But export growth has been weakening, while the current account deficit has been widening. Portfolio inflows have turned jittery after the government’s bid to impose general anti-avoidance rules.
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Limited choices | ( PDF )
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Softer stance on rates called for
By Ajit Ranade
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The author is chief economist, Aditya Birla Group
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Ourview | Monetary policy: the chicken and egg game
By Tamal Bandyopadhyay
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Tamal Bandyopadhyay is Mint Deputy Managing Editor in Mumbai
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Inflation not tamed yet
By Leif Eskesen
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The author is chief economist for India and Asean HSBC Global Research
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Beyond interest rate cuts
By Siddhartha Roy
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The author is economic adviser, Tata group
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Rate cut will be a close call
By Samiran Chakraborty
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The author is regional head (research), India, Standard Chartered Bank
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The carrot and the stick
By Richard Iley
The policy choices before the Reserve Bank of India (RBI) in the run-up to its 2013 annual monetary policy remain vexing. Its dominant concern and indeed constraint is that the policy mix, the blend of monetary policy and fiscal policy that necessarily shapes the economy’s performance, remains sub optimal. Despite the central bank’s increasingly loud exhortations for fiscal consolidation, the government borrowing has remained uncomfortably high in recent years.
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The writer is chief economist Asia BNP Paribas SA
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RBI must innovate to manage crunch
Banker’s Trust | Tamal Bandyopadhyay
We are a week away from the Reserve Bank of India’s (RBI) annual monetary policy for fiscal 2013. Two sets of critical data—factory output for February and inflation in March—will be released before the policy, and both have a bearing on its theme. At this point, what is crystal clear is that partial devolvement of the year’s first bond auction is not a happy omen, and the Indian central bank will have a challenging year ahead grappling with tight liquidity and a record government borrowing.
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Tamal Bandyopadhyay keeps a close eye on all things banking from his perch as Mint’s deputy managing editor in Mumbai
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