Published April 04, 2019 Features Associated Press Facebook Twitter Comments Print India's central bank has lowered its key interest rate by a quarter of a percentage point to 6% to strengthen domestic growth ahead of a national election next week. The interest rate is what the federal bank charges on lending to commercial banks. Lower interest rates help borrowers. Continue Reading Below The rate cut comes amid a deterioration in the outlook for regional and global growth. In a bimonthly review of the economy released on Thursday, the Reserve Bank of India cut the retail inflation forecast to 2.9-3% for the first half of this fiscal year. It cited lower food and fuel prices and expectations for a normal rainy season. In its February policy statement, the RBI had projected retail inflation at between 3.2-3.4%. India's financial year runs from April-March. … [Read more...] about India’s central bank cuts lending rate to 6%
Rbi rate cuts
By Manoj Kumar NEW DELHI (Reuters) - The Reserve Bank of India's surprise decision to cut interest rates for the first time in 18 months on Thursday is a pre-election stimulus gift from a compliant central bank for Prime Minister Narendra Modi. But businesses and farmers - and even some of his own supporters - say it may be too little, too late to help the economy ahead of voting, which must be held by early May. The quarter-point reduction in the benchmark repo rate follows intense pressure late last year on the RBI to listen to government and business concerns and ease monetary policy. The threat to the central bank's autonomy led to the departure in December of its governor, Urjit Patel, and his replacement by Shaktikanta Das, whose views were much more in line with the Modi administration. There have been signs that Modi's support has crumbled in parts of a countryside that supported his Hindu nationalist Bharatiya Janata Party (BJP) in the last election in 2014. Among the … [Read more...] about India’s central bank delivers a pre-election rate cut gift to Modi but is it enough?
By Suvashree Choudhury and Abhirup Roy MUMBAI (Reuters) - Doubts over how India will vote in a coming election and fears that the government will overspend persuading people to extend its mandate is keeping investors wary of buying bonds despite the lure of low inflation and possible interest rate cuts. "There is obviously increasing uncertainty going into the general election and that is making investors generally a bit more cautious," said Leong Lin-Jing, investment manager at Aberdeen Standard Investments in Singapore. On Friday, the Hindu Nationalist government of Prime Minister Narendra Modi will unveil an interim budget that is expected to be full of goodies for rural and urban middle class voters. Direct cash transfers to farmers, interest-free loans and income tax cuts might help the ruling Bharatiya Janata Party's chances in a general election that must be held by May. But pre-election largesse won't reassure investors wanting more commitment to fiscal consolidation. … [Read more...] about Election worries muddy waters for bond investors in India
By Aftab Ahmed and Krishna N. Das NEW DELHI (Reuters) - A series of vote-catching measures planned by Indian Prime Minister Narendra Modi as he braces for a difficult general election may cost more than 1 trillion rupees ($14 billion), two sources with direct knowledge of the matter said. Much of the cost of the extra spending or revenue losses would have to be borne by the government that will take charge after the election due by May. The spending is also likely to delay plans to reduce the government's budget deficit, a key indicator of the nation's economic health. Modi's Bharatiya Janata Party (BJP) lost three major state elections at the end of last year, largely due to anger in rural India in the face of low crop prices and rising costs. Modi remains the front-runner for the general election, according to opinion polls, but his once-invincible image has been dealt a heavy blow. The government is expected to unveil handouts mostly aimed at farmers in an interim budget to be … [Read more...] about Modi’s pre-election handouts to cost India billions, breach fiscal targets
(Reuters) - Following are five big themes likely to dominate thinking of investors and traders in the coming week and the Reuters stories related to them.1/A (BREXIT) RECKONING Prime Minister Theresa May's long-awaited Brexit deal triggered a wave of ministerial resignations that has rocked her government and financial markets and raised chances of a snap election. gi The pound took the hardest beating. Traders who had hung back from big sterling bets for much of 2018 rushed to sell it, fuelling its biggest daily drop against the euro since 2016. Gilt yields tumbled too and the FTSE index, which usually rises when sterling falls, lost that inverse correlation and closed flat after Thursday's mayhem. One-month implied volatility on sterling -- basically a gauge of how much traders expect it to swing in a given period -- has climbed to over 15 percent. Not only is that double the volatility of the euro and almost triple yen and Swiss franc levels, it has now entered territory reserved … [Read more...] about Take Five: Black Friday shoppers to Brexit wreckage, world markets themes for the week ahead