The Reserve Bank of India (RBI) is expected to keep interest rates unchanged for the second time in six weeks on Tuesday, with Governor Raghuram Rajan expected to strike a hawkish tone on inflation that is easing but remains high.
Investors are worried that rates will stay high for longer after a RBI panel last week proposed revamping the way monetary policy is made, including using consumer prices as a benchmark for targeting inflation.
The consumer price index (CPI) eased to a three-month low of 9.87 percent but remains well above the central bank's policy repo rate of 7.75 percent. The wholesale price index, long the RBI's main price barometer, slowed to 6.16 percent in December.
"The report has triggered expectations that interest rates will remain elevated for an elongated period of time," said Soumya Kanti Ghosh, chief economic adviser at State Bank of India.
While it is not clear when the RBI might adopt any of the proposed changes, some of which need legislative approval, 10-year bond yields have risen to more than 8.7 percent from 8.5 percent before the report.
Meanwhile, a sell-off in emerging market currencies on concerns that growth in China is slowing and that the U.S. Federal Reserve could further wind back its monetary stimulus when it announces its two-day meeting outcome on Wednesday may keep the Indian rupee under pressure. Read more..
Source: Hindi News
From Reuters News
Investors are worried that rates will stay high for longer after a RBI panel last week proposed revamping the way monetary policy is made, including using consumer prices as a benchmark for targeting inflation.
The consumer price index (CPI) eased to a three-month low of 9.87 percent but remains well above the central bank's policy repo rate of 7.75 percent. The wholesale price index, long the RBI's main price barometer, slowed to 6.16 percent in December.
"The report has triggered expectations that interest rates will remain elevated for an elongated period of time," said Soumya Kanti Ghosh, chief economic adviser at State Bank of India.
While it is not clear when the RBI might adopt any of the proposed changes, some of which need legislative approval, 10-year bond yields have risen to more than 8.7 percent from 8.5 percent before the report.
Meanwhile, a sell-off in emerging market currencies on concerns that growth in China is slowing and that the U.S. Federal Reserve could further wind back its monetary stimulus when it announces its two-day meeting outcome on Wednesday may keep the Indian rupee under pressure. Read more..
Source: Hindi News
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