Bond markets

RBI Governor Shaktikanta Das. (File photo) Dear Reader , A day before the monetary policy announcement, the yield on the 10-year bond fell sharply on a media report that the MPC would signal a pause after Friday’s hike. Thankfully, the MPC held firm, refusing to oblige the bond markets. Not only did it increase the repo rate by 50 basis points, but also the MPC signalled more rate hikes in future by refusing to tone down its ‘withdrawal of accommodation’ stance. Much is being made of the fact that the policy rate is now at the pre-pandemic level. At 5.4 percent, the repo rate is now back to where it was in September 2019. But that is n​o big deal. GDP growth was a measly 3.7 percent in 2019-20 compared to RBI’s projection of 7.2 percent in 2022-23; retail inflation was a much lower 4.8 percent in 2019-20, compared to a projected 6.7 percent for 2022-23; the current account deficit was a comfortable 0.9 percent of GDP in 2019-20 as against projections of around 3 percent … [Read more...] about Moneycontrol Pro Weekender | Shaktikanta Das refuses to pivot

Representative image Shares slipped and the dollar hung off recent highs on Tuesday as investors eyed U.S. inflation data due a day later that will likely yield clues to any further aggressive Federal Reserve rate hikes. The stakes are high for the July U.S. consumer prices report on Wednesday after an unexpectedly strong U.S. jobs data last week boosted expectations of a sharp interest rate increase to tackle soaring inflation. The broader Euro STOXX 600 fell 0.6%, after logging its best session in nearly two weeks on Monday, with German stocks down 0.7%. Miners and autos, among top gainers a day earlier, led declines on Tuesday. Wall Street futures pointed to slim gains. "The focus is on tomorrow's U.S. inflation numbers and whether or not they are likely to show any indication of a softening of inflationary pressures," said Michael Hewson, chief market analyst at CMC Markets. Close "Are we near the peak, and will tomorrow's CPI numbers reflect that?" … [Read more...] about Stocks stumble as caution reigns ahead of U.S. inflation data

Representative image The Reserve Bank of India announced measures to ease forex inflows. This explainer helps us understand the measures and objectives behind them. What are forex inflows and why are they needed? One of the major factors of a country’s growth is higher savings. Savings are channelised into investments, which help drive the growth of an economy. If the domestic savings rate is low or the investment rate is higher than the savings rate, foreign exchange savings can be used to bridge the gap. Foreign exchange savings are nothing but net inflows of foreign capital. The Indian economy was liberalised in 1991 and efforts were made to attract forex inflows. There are various categories of forex such as Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI), NRI deposits, and External Commercial Borrowings (ECB). The government and the Reserve Bank of India welcome equity flows such as FDI and FPI, but are cautious about debt inflows because heavy … [Read more...] about MC Explains | Will steps to liberalise forex inflows help the rupee?