The Week in Review for 04 November 2010

The Week in Review for 04 November 2010

The RBI increased its two key policy rates for the sixth time this year on Tuesday. The repo rate is up 25 basis points to 6.25%. And the reverse repo has also been hiked by 25 basis points to 5.25%.

The repo is the rate at which the RBI lends to banks while the reverse repo is the rate at which the RBI absorbs extra cash.

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What the RBI has left untouched is the cash reserve ratio or CRR, which is still at 6%. The CRR is the percentage of deposits that banks have to keep with the RBI.

Manufacturing has picked up in October. The HSBC Markit purchasing managers’ index climbed to 57.2 for the month compared to September’s 55.1. Any figure greater than fifty on the index means a rise. And October is the 19th straight month of such gains.

Meanwhile services have also accelerated. The Business Activity Index for October stood at 56.2. In September it was at 55.6

Home minister P. Chidambaram has tried to end the India-US war of words on intelligence sharing. On Monday he said the issue of alleged terrorist David Headley was being blown out of proportion. Chidambaram added that the US had shared intelligence with India in the months leading up to the Mumbai attacks. Bu he also said it made no mention of Headley until October of 2009.