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Thursday November 26, 05:50 PM Reuters
Surging food prices may prompt RBI action
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By Rajesh Kumar Singh
NEW DELHI (Reuters) - Food price inflation picked up in mid-November, heightening concerns that it could raise broader inflationary expectations and adding to expectations monetary policy would be tightened in early 2010.
The food articles index rose an annual 15.6 percent as at Nov. 14, up from the previous week`s 14.6 percent rise. The weakest monsoon since 1972 and then floods in parts of the country have hurt farm output and pushed up food prices.
"The Reserve Bank of India would be concerned about the spill over of food inflation in broader economy and building up of inflationary expectation," said Aditi Nayar, an analyst with rating agency ICRA.
"Monetary tightening won`t reduce the food prices, but it will at least try and stem building up of inflationary expectations."
On Tuesday, C. Rangarajan, Chairman of Prime Minister Manmohan Singh`s Economic Advisory Council, told Reuters food price inflation was the biggest economic worry in the near term and a strong rise in food prices in November and December could prompt monetary action.
At a quarterly policy review in October, the Reserve Bank of India (RBI) withdrew some emergency liquidity support measures but left key rates unchanged.
Analysts polled at the time expected the cash reserve ratio to rise by the end of January, with interest rates expected to have increased by the end of April.
Food prices have tended to fall in November and December, but analysts are worried the seasonal dip may not be seen this year.
In October, the annual wholesale price inflation rate was 1.34 percent. The RBI estimates it will be at 6.5 percent at the end of the fiscal year in March, and economists think it could be even higher.
"We are likely to see more manufacturing inflation, given that manufacturing sector has been outperforming the other sectors," said Rahul Bajoria, an economist with Barclays Capital.
India`s industrial output grew 9.1 percent in September from a year earlier, helped by stimulus and festival demand.
Government officials have said that stimulus measures will remain in place for the remainder of 2009/10 to ensure the recovery sustains, and analysts think the Reserve Bank is likely raise the cash reserve ratio (CRR), the proportion of deposits banks need to keep with it, before acting on interest rates.
"There is a greater likelihood of a CRR hike than a repo rate hike. Simply because there is too much dollar liquidity," Bajoria said.
Foreign funds have bought more than $15 billion of local equities in 2009, leading to an appreciation in currency and stock prices.
The RBI has said there is a risk that if it raised interest rates ahead of other central banks, it could attract more inflows and complicate policymaking.
(Editing by John Mair and Malini Menon) ...
Thursday November 26, 06:30 PM Reuters
Mukherjee says "deeply concerned" about inflation
NEW DELHI (Reuters) - The government is "deeply concerned" about rising prices and will take all fiscal and monetary measures to contain prices, the finance minister said on Thursday.
"We are deeply concerned when prices go high," Pranab Mukherjee told parliament. "It will have to done by us - control of monetary policy, control of credit policy, control of fiscal policy."
(Reporting by Rajesh Kumar Singh and Manoj Kumar; Editing by Alistair Scrutton) ...
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Surging food prices may prompt RBI action
- Food price inflation picked up in mid-November, heightening concerns it could raise broader inflationary expectations and adding to expectations monetary policy would be tightened in early 2010.
...
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I would like to know about the theory of OPEN INTEREST in a Stock Future. How can one know whether the OPEN INTEREST is Positive(buy positions) or Negative (Sale positions)? Why people normally say that a particular stock future will go up or down at the end of a series??
I would appreciate if fellow boarders can throw sum light on my query....
some change is there , let them ape us and our culture....
good welcome changes... we are trying to transform them, instead of we going westernized......
so much to eat and our PM has just gone through by pass surgery. What is the rule of God. Those who can eat have nothing to eat and those who can not eat have so much to eat. Any way Dipak thanks because of you I enjoyed the taste of so many veg dishes that too in White House.
karshin...
This may have had as much to do with the vegetarian Prime Minister’s spartan taste as Obama’s own tryst with daal-roti when he was in college (his room-mate Vinai Thumullapally was among the invitees), although it was First Lady Michelle Obama who finalized it. Indeed, as predicted, some of the vegetarian fare, including the herbs, came from the First Lady’s White House vegetable garden. Indian touches included tomato chutney, green curry prawns, and coconut aged basmati. Hacks with a vivid imagination – and a hungry stomach – snarkily translated Red Lentil Soup into rajma, Chickpeas and Okra into cholay-bhindi, and cashew brittle into chikki.
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