At its policy meeting on 25 October, the Reserve Bank of India (RBI) raised interest rates by 25 basis points, lifting the repo rate to 8.50%. The move represents the 13th rate hike since March last year and was broadly anticipated by the market, as inflation remains stubbornly high, hovering above 9%. Monetary authorities deemed it ?necessary to persist with the anti-inflationary stance? despite acknowledging that a moderation in growth is stemming, in part, from tighter monetary policy. However, the Bank expressed serious concern that inflation remains persistently high despite a slower growth environment. In fact, the Bank expects inflation to remain high ?over next couple of months before moderating, as falling global commodity prices so far has been offset by rupee depreciation.? Moreover, monetary authorities are confident that inflation will finally begin to decrease in December and stated that, ?if the inflation trajectory conforms to projections, further rate hikes may not be warranted.?
India Monetary Policy
Central Bank raises interest rates and signals end of tightening cycle
October 25, 2011
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India Economic News
October 17, 2016
Recently-released data related to India’s external sector showed that the trade deficit totaled USD 8.3 billion in September, which was a smaller shortfall than the USD 10.2 billion gap recorded in September 2015 (August 2016: USD 7.7 billion deficit).
October 15, 2016
In September, consumer prices fell 0.23% from the previous month, which followed August’s flat growth.
October 12, 2016
The fall in industrial production moderated in August, after recording the largest contraction since November 2015 in July.
October 5, 2016
Activity in India’s manufacturing sector lost steam in September.
October 4, 2016
The newly facelifted Reserve Bank of India (RBI) decided to ease monetary policy at a scheduled meeting on 4 October, cutting the repurchase rate from 6.50% to 6.25%—an over five-year low.