Market analysts call Indian rupee overvalued and predict that it may reach up to Rs 70 per dollar, possibly, by the next year
WPI witnessed a growth of 3.18 percent in April and 2.26 percent in May 2017
ICRA's principal economist Aditi Nayar says the Monetary Policy Committee’s (MPC) surprise decision wisely hedges before the crucial data on monsoon, minimum support prices (MSP) and volatile global oil prices play out going forward.
RBI revised CPI inflation estimated for 2018-19 and projected it at 4.8-4.9 percent in April-September
On June 6, the Reserve Bank of India (RBI) raised the repo rate for the first time since 2014, by 25 basis points to 6.25 percent, as recent data showed significant increases for both inflation and growth. But the central bank kept its "neutral" policy stance unchanged.
The government breached its fiscal deficit target of 3.2 percent of GDP, but managed to meet its revised target of 3.5 percent for FY18.
Rise in inflation expectations was cited as a key reason behind the monetary policy committee's decision to hike the policy repo rate by 25 basis points to 6.25 percent on Wednesday.
Some housing financing companies focusing on the affordable housing segment have shown an above-average increase in delinquencies with gross NPA between 4 to 5 percent.
Soon after RBI's Monetary Policy Committee hiked repo rate by 25 basis points, here's what top bankers said about the move.
Since the beginning of the year, INR has depreciated by more than 5 percent.
A unanimous decision to hike rates comes with a dovish undertone
RBI, last month, slashed CPI inflation estimate to 4.7-5.1 percent for April-September 2018
WPI witnessed a growth of 2.47 percent in March and 3.85 percent April 2017
The BOJ last month removed any reference to a timeframe for hitting its 2 percent inflation target, in a surprise move analysts said was aimed at keeping market expectations for more stimulus in check.
In place of a thicket of forces that held inflation down in recent years, the economy is digesting massive fiscal stimulus from the Trump administration's tax cuts and spending as well as import tariffs that have sent steel and aluminium prices higher.
The RBI deputy says he is likely to shift decisively to vote for a beginning of “withdrawal of accommodation” in the June MPC meeting
Bhalla also said that real interest rate, which is the difference between the nominal interest rate and inflation, is very high in India and not justified for an emerging economy.
American brokerage Morgan Stanley, has said that the rise in inflation in the second half of the year which the RBI's lowered estimate also expects, may also result in a "shallow rate hike" cycle from October-December.
Repo rate, which is the rate at which banks borrow from RBI to meet short term fund requirements, stands at six percent while the reverse repo stands at 5.75 percent.
The country is well poised to click a growth rate of 7-8 percent and with focus on start-ups, MSMEs and infrastructure investment it can step on to higher growth pedestal, Economic Affairs Secretary Subhash Chandra Garg said.
For the Reserve Bank, the Consumer Price Index (CPI)-based retail inflation continues to remain the prime focus, besides monsoon, high crude oil prices and global financial conditions.
On the basis of Wholesale Price Index (WPI), inflation was 2.84 per cent in January and 5.51 per cent in February 2017.
According to Swiss brokerage firm UBS, the headline CPI inflation may average close to 4.7 per cent in 2018-19 (as against 3.6 per cent estimated in 2017-18).
Services activity suffered for most of last year following a ban of high value currency notes in November 2016. The July 1 implementation of a national sales tax 1 was another setback, weakening demand.
According to the global financial services major, minutes from the February 7 meet of Monetary Policy Committee (MPC) seem "hawkish", and highlight upside risks to inflation.