Markets

RBI repo rate: Arvind Subramanian says economic condition warrants policy easing

RBI repo rate: Arvind Subramanian says economic condition warrants policy easing

Differing views in terms of monetary policy between Reserve Bank of India Governor Urjit Patel Chief Economic Advisor of the Finance ministry Arvind Subramanian played out in full public view barely hours after the central bank announced the Monetary Policy Committee's decision to keep key interest rates unchanged.

"In recent times, seldom have economic conditions and the outlook warranted substantial monetary policy easing", Subramanian said, warning that real policy rates are becoming tighter amid low inflation and slowing growth.

Statutory Liquidity Ratio, widely known as SLR was cut down by 50 base points and the new rate stands at 20 percent.

The slowdown was largely attributable to the government's shock decision last November to remove large denomination banknotes from circulation in a bid to combat rampant tax avoidance.

The MPC will be meeting in the backdrop of India's economic growth slowing to 7.1 per cent in 2016-17. One has to understand also that the RBI is in a neutral rather than an accommodative stance, hence it will be more careful before deciding on policy action. "The meeting did not take place", RBI governor Urjit Patel told a media conference following the rates decision.




The autonomy of the individual or committee deciding monetary policies, including interest rates, is one of the key principles governing money supply in the economy. They also expected the reverse repo rate to be left at 6.00 percent.

Third, "The risk of fiscal slippages, which, by and large, can entail inflationary spillovers, has risen with the announcements of large farm loan waivers", the statement said, reiterating Patel's past stance - yet again a courageous statement that irk the ire of the ruling BJP government which planted the loan waiver-plank among farmers during the Uttar Pradesh polls. "We continue to expect the RBI to be on a prolonged pause but with risks of a 25bp rate cut in August if certain conditions are met". It is obvious that the RBI is more concerned with reining in inflation than giving the growth rate a fillip.

"If the configurations evident in April are sustained, then absent policy interventions, headline inflation is projected in the range of 2.0-3.5 per cent in the first half of the year and 3.5-4.5 per cent in the second half", it said. There is also greater clarity on the rainfall, with the IMD predicting for normal monsoons this season which can help the food inflation situation.

The RBI adjusted its projection for growth value-added, a measure of economic growth it prefers, to 7.3 percent in the year to March 2018, down from its previous projection of 7.4 percent, with "risks evenly balanced". Another former RBI Governor Duvvuri Subbarao wrote about tensions between him and former finance minister P Chidambaram when the central bank shrugged off government calls to cut rates in "Who Moved My Interest Rates".


  • Theresa May tries to quell public anger, meets fire victims

    Two neighbouring Tube lines are to be partly suspended into a second day amid safety concerns of debris falling on to the tracks. Anger is rising against British authorities over safety failings and a widely perceived slow release of information.
    So it begins: Britain kicks off Brexit negotiations with EU

    So it begins: Britain kicks off Brexit negotiations with EU

    Since the vote , finance minister Philip Hammond has renewed his calls for a business-friendly Brexit deal. May's foreign secretary Boris Johnson has insisted previously that such an outcome would be "perfectly ok".
    Pyongyang releases USA  student as Rodman kicks off non-official visit

    Pyongyang releases USA student as Rodman kicks off non-official visit

    Fowle left a Bible in a local club hoping a North Korean would find it, which is considered a criminal offense in North Korea . Tillerson said the State Department is still working on the release of the three other USA citizens detained in North Korea .
  • Tiger Woods says he's getting professional help to manage meds

    Tiger Woods says he's getting professional help to manage meds

    Woods apologized May 29 saying he had an "unexpected reaction" to medications. Tiger Woods is receiving help to manage his medications.

    Britain kicks off Brexit negotiations with EU

    He added: " Brexit won't make anything better, but it will make a lot of things more hard ". We must lift the uncertainty caused by Brexit .
    Linfield will play Celtic if they see off San Marino champions

    Linfield will play Celtic if they see off San Marino champions

    Celtic will play Linfield of Northern Ireland or La Fiorita of San Marino in the second qualifying round of the Champions League .
  • Champions Trophy: India beat Pakistan by 124 runs

    Champions Trophy: India beat Pakistan by 124 runs

    Ahmed Shehzad (22) was the first one to go back. "But regardless of who you play, you just want to play cricket", he added. I think it really deflated the opposition and that gave me the time to settle in.
    Shiv Sena non-committal on BJP Presidential candidate Ram Nath Kovind

    Shiv Sena non-committal on BJP Presidential candidate Ram Nath Kovind

    By proposing Kovind's name the party is trying to woo Dalit voters ahead of crucial polls. Mayawati, in her remarks to the media, said: "We are not against Kovind's nomination.
    Apple Music adds a $99 annual subscription Plan

    Apple Music adds a $99 annual subscription Plan

    If you're a current subscriber to Apple Music and a yearly subscription works better for you, consider the yearly option. This means that new subscribers will first have to purchase a monthly subscription before they're allowed to switch.
  • Death toll in London tower block fire rises to 79

    Flowers and missing persons posters were taped to the gates of the church, while bags of donations were piled outside the door. His family said Alhajali “came to the United Kingdom because he had ambitions and aims for his life and for his family.”.
    Congressman Scalise Upgraded to Serious Condition, Showing Improvement: Hospital

    Congressman Scalise Upgraded to Serious Condition, Showing Improvement: Hospital

    After Saturday's surgery, which was not described in detail, Scalise "continues to show improvement", the hospital statement said. The surgeon on Friday said he was "a lot more confident and optimistic" about Scalise's recovery than he was two days ago.
    Trump slams Russian Federation  'witch hunt,' touts himself, agenda on Twitter

    Trump slams Russian Federation 'witch hunt,' touts himself, agenda on Twitter

    But Sekulow claimed the president wasn't referring to an actual investigation in the message, but instead a news report about one. Mueller, the FBI director before Comey, has not released any details on the investigation.