Arab Today, arab today india central bank shifts focus to growth
Last Updated : GMT 19:44:23
Arab Today, arab today
Arab Today, arab today

India central bank shifts focus to growth

Arab Today, arab today

Arab Today, arab today India central bank shifts focus to growth

Mumbai - Arabstoday

India cut cash reserve requirements for banks by 50 basis points on Tuesday to ease tight liquidity conditions, signaling a shift in policy towards reviving growth after two years of fighting inflation. With core inflation still stubbornly high, the Reserve Bank of India as expected left its policy repo rate unchanged at 8.50 percent for the second consecutive review. The central bank had raised rates 13 times between March 2010 and October 2011, making it one of the most hawkish central banks anywhere. \"The growth-inflation balance of the monetary policy stance has now shifted to growth, while at the same time ensuring that inflationary pressures remain contained,\" RBI Gov. Duvvuri Subbarao said in his policy statement. Still, Subbarao said the \"current inflation trajectory\" made it premature to cut the policy rate, disappointing markets looking for definitive guidance on an interest rate cut. Bond and interest rate swap markets initially applauded the cut in the cash reserve ratio (CRR), although yields and swap rates later rose on concerns that the move meant the RBI would slow down bond buybacks through open market operations. Stocks, however, ended 1.46 percent higher on the day, powered by bank shares. \"RBI has clearly said growth concerns have come center-stage despite lingering inflationary pressures,\" said Sumedh Deorukhkar, senior economist at Spanish bank BBVA in Mumbai, who expects a 25-basis-point cut in the repo rate at the RBI\'s next review on March 15 and a combined 150 bps in cuts by the end of 2012. Expectations had grown in recent days that the RBI would cut the cash reserve ratio, the share of deposits banks must hold with the central bank. The cut on Tuesday lowered CRR to 5.50 percent and would release about Rs.320 billion ($6.4 billion) of liquidity into the banking system. INFLATION WORRY PERSISTS The RBI kept to its hawkish stance long after most central banks shifted their focus to growth, as inflation in India remained high due to elevated food prices, infrastructure bottlenecks, and an expansionary fiscal policy that pushed up rural spending power and strained government finances. Annual headline inflation, measured by the wholesale price index, slowed to a two-year low of 7.47 percent in December, thanks to a sharp decline in food inflation. However, manufactured product inflation edged up from the previous month, and the RBI said in a report on Monday that the two drivers of rate policy would be core inflation and the impact of exchange rate changes on inflation. The 16 percent drop in the rupee in 2011 has made imports even more expensive. \"Our sense is that the cut in cash reserve ratio is a reaction to the acute liquidity deficit that is persisting. As far as the inflationary situation is concerned, it has not materially changed apart from some softening in food prices,\" said Sujan Hajra, chief economist at Anand Rathi Securities. Subbarao reiterated his call for more fiscal discipline from New Delhi, which is widely expected to fall far short of its deficit-cutting target for the current fiscal year. \"In the absence of credible fiscal consolidation, the Reserve Bank will be constrained from lowering the policy rate in response to decelerating private consumption and investment spending,\" Subbarao said in his report. C. Rangarajan, chairman of the prime minister\'s Economic Advisory Council, told TV channels that the RBI should cut interest rates only when there are definite signs that non-food inflation was easing. As expected, the RBI lowered its GDP growth forecast for the fiscal year that ends in March to 7 percent from 7.6 percent, and left its wholesale price index inflation target unchanged at 7 percent. Asia\'s third-largest economy grew 8.5 percent in the previous fiscal year. The RBI said it expected a \"modest\" recovery in growth in the fiscal year that starts in April, and said that while inflation may ease, price pressures persist. Upside risks to inflation arise from global crude oil prices, the lingering impact of rupee depreciation and slippage in the fiscal deficit,\" it said.    

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today india central bank shifts focus to growth Arab Today, arab today india central bank shifts focus to growth

 



Arab Today, arab today
Arab Today, arab today Nohan Seyam designs beautiful accessories

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories
Arab Today, arab today Tourism shows signs of recovery

GMT 09:59 2017 Monday ,20 February

Tourism shows signs of recovery
Arab Today, arab today Sarah Belamesh designs antiques of "ceramic"

GMT 19:45 2017 Monday ,20 February

Sarah Belamesh designs antiques of "ceramic"
Arab Today, arab today Top Yemen commander killed

GMT 09:55 2017 Wednesday ,22 February

Top Yemen commander killed
Arab Today, arab today Media host Mona Iraqi stresses her show's success

GMT 15:32 2017 Wednesday ,22 February

Media host Mona Iraqi stresses her show's success
View News in Arabic - Business: مصارف
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today To hold social dialogue over secondary school

GMT 07:43 2017 Wednesday ,22 February

To hold social dialogue over secondary school
Arab Today, arab today 63-Year-Old Woman Delivers Baby

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby
Arab Today, arab today Milan laughs while Rome cries

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Nissan enhances sales in most markets

GMT 14:08 2017 Monday ,20 February

Nissan enhances sales in most markets
Arab Today, arab today Competes Sweden and Germans by S90

GMT 22:36 2017 Thursday ,16 February

Competes Sweden and Germans by S90
Arab Today, arab today Janat pleased for issuing 'Good Morning'

GMT 06:41 2017 Monday ,20 February

Janat pleased for issuing 'Good Morning'
Arab Today, arab today Small ponds have outsized impact

GMT 15:53 2017 Tuesday ,21 February

Small ponds have outsized impact

GMT 06:34 2017 Sunday ,19 February

Ahmed Fahmy stresses he did not ignore singing

GMT 06:50 2017 Wednesday ,15 February

Tragic fluctuations of Bakhtiari's life revealed

GMT 12:22 2017 Monday ,20 February

Kanye West puts hijab-wearing model

GMT 14:06 2017 Friday ,17 February

London to tax old cars

GMT 23:29 2017 Thursday ,16 February

Home built on sand castles-style costs $8m

GMT 05:15 2017 Tuesday ,21 February

Omega 3 can reduce asthma cases

GMT 19:16 2017 Friday ,17 February

Aziz House ready to host the tourists

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 12:39 2017 Monday ,20 February

newest smartphone another winner for Huawei

GMT 16:08 2017 Wednesday ,15 February

Shawsh reveals her collection "Jewelry of dreams"
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday