The Monetary Policy Committee of the RBI has left the policy rates unchanged, with the Repo Rate at 6.50%. The rationale for the status quo on rates is given in the policy statement – “Headline inflation has come off the December peak; however, food price pressures have been interrupting the ongoing disinflation process, posing challenges […]
The CPI based inflation for the month of February 2024 remained largely unchanged at 5.09% as compared to the previous month. The CPI inflation during the year ago period was reported at 6.44%. While the headline number remained flattish, the underlying components reflected diverging trends; the food inflation inched higher, whereas core inflation continued with […]
The RBI decided to maintain status quo on the rates front and continue with its stance of withdrawal of accommodation to progressively achieve its inflation target of 4%, while supporting growth. While there were no expectations on the rate front, there were some market participants expecting a change in stance from the current one of […]
The Interim Budget or the Vote-on-Account presented by the Finance Minister, reflects a significant amount of continuity, and the commitment to continue with several welfare measures benefitting the diverse strata of society, especially the poor, youth, women, and farmers. The projected government borrowing program for FY25 is lower than the FY24 numbers. The gross borrowing […]
As far as policy rates are concerned, it is going to be a period of prolonged hold. The Monetary Policy Committee of the RBI, in its meeting decided to keep the base rates unchanged. This is in line with the general expectations. This is also in alignment with the RBI’s objectives of controlling inflation, and […]
The CPI based inflation eased for the third consecutive month and was reported the 5% mark. The headline inflation for the month of Oct’23 came in at 4.87% as compared to 5.02% for the preceding month and 6.77% for the year ago period. A high base and continued easing in core inflation numbers were the […]
The Fed in the recently concluded FOMC meeting left the policy rate unchanged. This is the second time in succession that the Fed has left the rates on hold. This is an indication of the policy rates reaching more or less the peak levels, and any further up-moves may be small in relation to the […]
The CPI based inflation eased to 5.02% for the month of Sep’23 as compared to 6.83% in the preceding month and 7.41% during the year ago period. The easing in the prices of vegetables and a favourable base effect were the key factors that supported the easing of headline numbers and the same getting reported […]
The RBI decided to maintain status quo on the rates front and continue with its stance of withdrawal of accommodation to progressively achieve its inflation target of 4%, while supporting growth. While the policy was on expected lines on the rates front, the major surprise was in the form of governor mentioning OMO-sales in his […]
The GDP growth rate for Q1FY24 came in at 7.8% as compared to growth of 6.1% in the preceding quarter and 13.1% during the year ago period. The GDP growth rate was in line with street estimates. The strong performance of the services sector and robust government capex were the key factors contributing to the […]
Pre-Policy Assessment: The pre-policy assessment which we had published is as follows: “In the last two policy announcements RBI maintained a studied pause while making it amply clear that based on data if required the RBI would go in for rate hikes. In fact, it seems like RBI has more or less arrived at a […]
The Fed has announced an expected hike in the Fed Funds Rate of 0.25%, the Fed Fund rate target range is now at 5.25%-5.5%. In its previous policy announcement, wherein the Fed had maintained a pause, the Fed had indicated at two more rate hikes for the remainder of the year. Even though inflation has […]
The CPI based inflation moved higher for the month of Jun’23 and was reported at 4.81%, after easing for 4 consecutive months. The inflation for the preceding month and the comparable year ago period was 4.31% and 7.01% respectively. The surge in food prices was one of the key contributing factors to that led to […]
The Fed has announced a much-expected pause in the interest rate hikes cycle. The pause, or a “skip” as some are calling it, was anticipated after the recently released inflation numbers. The consumer price inflation was reported at 4% for the month of May 2023, the lowest since March 2021. The RBI too in two […]
As was widely expected, the RBI has left the key policy rate, the Repo rate, unchanged at 6.50%. The economic environment is very similar to the one in the month of April 2023, when RBI declared its first status quo policy in the current rate hike cycle. Even though the inflation remains above the RBI’s […]
In a widely anticipated move the US Fed hiked the repo rate by 25 bps, thereby taking the federal funds rate target range to 5% to 5.25%. The second expectation of the market has also come through. The Fed has given soft indications that it may pause, or this might be the last one in […]
In a widely anticipated move the US Fed hiked the repo rate by 25 bps, thereby taking the federal funds rate target range to 4.75% to 5%. This job growth remains strong, the unemployment rate has remained low and the inflation remains elevated, but what has changed since the last FOMC meeting is the emergence […]
The CPI based inflation surged for the month of Feb’23 remained largely stable at 6.44% as compared to levels reported for the preceding month i.e., 6.52%. For two consecutive months, the headline inflation numbers have now remained outside the RBI’s target range. The consumer food price index-based inflation as well as core inflation eased marginally […]
The CPI based inflation surged for the month of Jan’23 and was reported at 6.52%, a three month high. After easing for two consecutive months, the headline inflation numbers have surged again and has landed outside the RBI’s target range. The headline inflation number for the preceding month and for the year ago period was […]
RBI has hiked the Repo Rate by 25 bps from 6.25% to 6.50%, reaffirming its commitment to containing inflationary pressures. The rate action was expected from the RBI in view of the inflationary trend and also against the background of the Fed hiking the Fed Funds rate again. The need to protect the Rupee by […]
In the last one week there have been a number of data points to gain some inferences from mainly on the US and Europe. The US GDP growth for Q4 of 2022 came in at 2.90%. This is well above the consensus of 2.50% and surprising on the higher side, though not significantly. The Q3 […]
The CPI based inflation eased for the month of Dec’22 and was reported at 5.72%, a marginal surprise to the consensus estimates. This is the second consecutive month of headline numbers getting reported within the RBI’s target range; after remaining above the 6% mark for 10 consecutive months. The headline inflation number for the preceding […]
The Fed has hiked the base rate by 50 basis points, taking the Fed Funds Rate to 4.25% to 4.50%. The hike of 50 basis points is by no means a small hike, but some relief could be had from the fact that it is smaller compared to the earlier rate hikes. That would also […]
The Pace of Tightening Slows… The Policy Action RBI has hiked the Repo Rate by 35 basis points taking the policy rate to 6.25%, and the SDF rate to 6.00%. The policy action was on expected lines, the central bank was seen reducing the pace of rate hikes in the wake of moderating inflation (as […]
The CPI based inflation eased for the month of Oct’22 and was reported at 6.77%. The headline inflation number for the preceding month and for the year ago period was 7.41% and 4.48% respectively. The easing in YoY inflation for food prices was the primary contributor to some respite seen in headline numbers. The core […]
The Fed Funds Rate decision was on expected lines, with FOMC hiking the rate by 75 bps. This takes the target range to 3.75% to 4%. The inflation has been running hot at 8% plus headline numbers for 7 consecutive months, a far cry from the Federal Reserve’s target of 2%. Fed has indicated that […]
The CPI based inflation moved higher for the second consecutive month and has now stayed outside the RBI’s target range for the ninth consecutive month. The headline inflation number for the month of Sep’22 was reported at 7.41%, as compared to 7.00% in the preceding month and 4.35% during the year ago period. The uptick […]
The Policy Action RBI has hiked the Repo Rate by 50 basis points taking the policy rate to 5.90%, and the SDF rate to 5.65%. The policy action confirms the stance of the central bank and that tightening will continue till price stability is attained. The Background ➢ The policy has been announced against the […]
The CPI based inflation moved higher, after easing for three consecutive months. The headline inflation number for the month of Aug’22 was reported at 7%, as compared to 6.71% in the preceding month and 5.30% during the year ago period. The uptick in food inflation was the key contributor to the hardening of headline inflation. […]
The address of the Fed Chair at Jackson Hole was on ‘monetary policy and price stability’. There was nothing much that was unexpected in the speech except that it scaffolded in an unusually emphatic way the importance of price stability, that is, lower inflation, as a prerequisite for sustainable economic growth. In an invariably divided […]
The CPI based inflation eased marginally and was reported at 6.71% for the month of Jul’22, as compared to 7.01% in the preceding month, and 5.59% during the year ago period. The easing of food inflation was the key contributor to the softening of headline inflation. Core inflation too witnessed a move similar to the […]
In June the retail prices rose by 9.10%, the highest level in almost four decades. This rise is despite the last three hikes in the base rate. Therefore, the objective of countering the rising inflation, and bringing it back to the Fed’s target level of 2% remains uppermost in the Fed’s mind. It was expected […]
The CPI based inflation remained flattish and was reported at 7.01% for the month of Jun’22, as compared to 7.04% in the preceding month, and 6.26% during the year ago period. A favourable base effect and softness in prices of food articles led to a stable headline number. Core inflation too witnessed a move similar […]
The Fed rate hike of 75 basis points is through, and it is well on the lines expected by majority of the market participants. This takes the Fed Funds target range to 1.50% to 1.75%. It was on the back of a fiercely raging inflation at 8.60% in May that the Fed rate hike has […]
The CPI based inflation stayed above RBI’s target range of 2% to 6% for the fifth consecutive month, although it has moderated marginally. The headline inflation for the month of May’22 came in at 7.04% as compared to 7.79% in the preceding month, and 6.30% during the year ago period. Even as the high base […]
RBI has announced that it will continue the accommodative stance of the policy and will gradually bring down the level of accommodation over a period of time. In other words, the RBI “decided to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.” […]
The CPI based inflation hardened for the month of Nov’21, second consecutive month in a row, as food inflation ticked higher. The headline inflation for the month of Nov’21 came in at 4.91% as compared to 4.48% in the preceding month and 6.93% during the year ago period. The core inflation remained largely stable and […]
The RBI policy announcement has retained the policy rates unchanged, with Repo Rate and Reverse Repo Rate at 4.00% and 3.35% respectively. The policy underlines the commitment to pursue an accommodative stance for an extended period of time to support economic growth, while pursuing the liquidity normalization. As expected, the liquidity management aspects get more […]
The CPI based inflation has moderated and it has fallen within the RBI’s target range of 4% +/- 2% after a gap of two months. The headline CPI inflation wasreported at 5.59% for the month of Jul’21 as compared to 6.26% for the preceding month and 6.73% during the year ago period. The easing in […]
In the monetary policy review by the RBI, all the key rates have been left unchanged. This is on expected lines, and RBI continues to lay accent on the need to sustain growth in preference to price stability, and therefore, an accommodative policy. Inflation is still very close to the RBI’s target range, though a […]
The CPI based inflation moderated marginally in the month of June but stayed outside the RBI’s targeted range for second consecutive month. The headline CPI inflation was reported at 6.26% for the month of Jun’21 as compared to 6.30% for the preceding month and 6.23% during the year ago period. The rural and urban inflation […]
Early Hints You may be able to recall that in the Emkay Navigator, June, 2021, we had discussed the US-centric developments as follows: “The focus of attention is gradually shifting again to the US recovery, away from the impact of the second and third wave of the pandemic. While growth is happening in the US, […]
The CPI based inflation rose sharply in the month of May as against the expectations of a moderate rise from the inflation numbers of April month. The headline CPI inflation was reported at 6.30% for the month of May’21 as compared to 4.23% for the preceding month and 6.27% during the year ago period. A […]
The policy announcement from the RBI, after the MPC meeting, has left all the key policy rates unchanged. It has reaffirmed the commitment to continue with the accommodative stance. It was expected that the RBI may not bring about any changes in the policy as such due to two factors, (i) there was an interim […]
The GDP growth number for Q4FY21 was reported at 1.6% as compared to 0.5% in the preceding quarter. The GDP for FY21 was reported at -7.3%, largely reflecting the pandemic driven impact to the economy. The GVA number for Q4FY21 came in at 3.7% as compared to 1% in the preceding quarter. The yearly growth […]
Consumer Price Index for the month of April, came at 4.29 % quite on the lines expected by many market participants mainly due to the fall in the food inflation and the favourable base effect. This is quite a bit of a pull back from the 5.52% level seen in March. Last year, for the […]
Consumer Price Index (CPI) The CPI based inflation, continued to inch upwards owing to broad based inflationary pressures; the food and fuel as well as core inflation remained firm in the month of Mar’21. The headline CPI inflation was reported at 5.52% for the month of Mar’21 as compared to 5.03% for the preceding month […]
1. Policy Rates Unchanged On expected lines, the RBI has kept the policy rates unchanged, the repo rate stays at 4%. The accommodative stance has been reaffirmed. The soft stance with adequate liquidity support will continue till sustainable growth emerges, and more so in the light of the resurgence in the second wave of the […]
The manufacturing activity, as measured by the PMI index, continued to report healthy growth. The manufacturers indicated that sequential improvement in demand and a pick-up in bulk orders were the key factors underpinning the robustness in manufacturing sector. The headline index numbers fell to a seven-month low of 55.4 in the month of March from […]
The curiosity about the government borrowing program is much less compared to the other developments around the fisc. This is because the quantum of borrowing is clearly laid down in the budget a couple of months ahead of the new financial year. But things like the maturity profile of the borrowing, the composition in terms […]
The CPI based inflation, after easing for three consecutive months, rose on the back of upward move in food prices; headline CPI inflation was reported at 5.03% for the month of Feb’21 as compared to 4.06% for the preceding month and 6.58 during the year ago period. Over the recent past it has been the […]
The GDP growth number for the last quarter, Q3FY21, at 0.40% corresponds to more or less what most of the market participants and analysts had expected. The GDP has reported positive growth after two consecutive quarters of contraction (-24.4% for Q1FY21 and -7.3% for Q2FY21). That should bring in some amount of relief. The reason […]
The CPI based inflation eased for the third consecutive month on the back of fall in prices of food articles; headline CPI inflation was reported at 4.06% for the month of Jan’21 as compared to 4.59% for the preceding month and 7.59% during the year ago period. The headline inflation numbers touched a sixteen-month low […]
The RBI released its own budget-like document, wherein it reiterated its commitment towards an accommodative policy to support growth and also came out with supportive measures to ensure flow of liquidity to segments of the economy immediately in need of it. In this context, while on the one hand RBI announced phased restoration of CRR […]
The budget announcement for FY22 was keenly awaited as it was coming in the backdrop of a global pandemic. The economic activity across the globe came to a virtual standstill owing to the lockdowns imposed to control its spread. On the one hand, budget was expected to be growth supportive, but there were cautions being […]
The industrial activity growth, as measured by IIP, contracted in the month of Nov’20 after growing for two consecutive months. The IIP growth for the month of Nov’20 was reported at -1.9% as compared to growth of 4.2% in the preceding month and 2.1% in the year ago period. The relaxations in lockdown have definitely […]
The CPI based inflation eased for the second consecutive month on the back of fall in prices of food articles; headline CPI inflation was reported at 4.59% for the month of Dec’20 as compared to 6.93% for the preceding month and 7.35% during the year ago period. The headline inflation numbers touched a fifteen-month low […]
The FOMC statement released yesterday maintains status quo on the base rate. The following were the main decisions at the FOMC meeting: To undertake open market operations to maintain the federal funds rate in a target range of 0 to 0.25%. Purchase of treasury securities will be US$ 80 billion per month and mortgage-backed securities […]
The CPI based inflation eased after the hardening trend of the preceding three months; headline CPI inflation was reported at 6.93% for the month of Nov’20 as compared to 7.61% for the preceding month and 5.54% during the year ago period. The inflation numbers remained outside the RBI’s target range but eased on the back […]
The IIP growth reverted to positive zone after a gap of six months in Sep’20 and maintained the momentum in the month of Oct’20. The IIP growth for the month of Oct’20 was reported at 3.6% as compared to upwardly revised growth of 0.5% in the preceding month and -6.6% in the year ago period. […]
Rates & Policy Stance Unchanged The RBI policy announcement has left the repo rate unchanged at 4%, and it has decided to continue with the accommodative stance of the policy as long as it is needed. This is quite in line with what market participants expected from the RBI. The potential for inflationary pressures has […]
India enters a technical recession with two consecutive quarters of economic growth contraction. The GDP contracted by 7.50% in Q2FY21, as against the 23.90% contraction seen in Q1. It is pertinent to note that the rate of GDP growth is at an 11-year low, as compared to 4.20% in 2019-20, and an expansion of 6.10% […]
The CPI-based inflation maintained its upward momentum and surged further ahead; headline CPI inflation was reported at 7.61% for the month of Oct’20 as compared to 7.27% for the preceding month and 4.62% during the year ago period. The inflation numbers remained above the 7% mark for the second consecutive month. The elevated levels of […]
The IIP numbers reported expansion in industrial activity after witnessing contraction for six consecutive months. The IIP growth for the month of Sep’20 was reported at 0.2% as compared to -7.4% in the preceding month and 57.3% in the month of Apr’20. The growth number was healthy not only on a sequential basis but also […]
The CPI based inflation surged further and was reported at 7.34% for the month of Sep’20 as compared to 6.69% for the preceding month and 3.99% during the year ago period. The inflation numbers have remained sticky above the 6% level and breached the 7% mark for the third time in CY2020. The elevated levels […]
The IIP number remains in contractionary zone but continued its path to gradual recovery. The IIP contraction for the month of Aug’20 was reported at 8% as compared to 10.8% in the preceding month and 57.3% in the month of Apr’20. The pace of recovery has lost some steam, and this was largely expected as […]
In the monetary policy review, the RBI kept the repo rate unchanged at 4%, and all the other policy rates too, remain unchanged. The RBI will continue the accommodative stance of the policy for this financial year and into the next year depending upon the requirements of growth. The RBI policy that has been announced […]
The response of the markets to the Fed statement is no surprise. An extended period of low interest rates means three things, one, the current economic conditions are extremely distressful, two, the time taken for recovery is likely to be longer than expected, and three, an extended period of low growth. If a long-drawn struggle […]
The CPI based inflation was reported at 6.69% for the month of Aug’20 as compared to 6.73% for the preceding month and 3.28% during the year ago period. The inflation numbers have remained sticky at around 6% levels for the year 2020. The elevated levels of food inflation during the year been the major factor […]
The IIP numbers continued to remain in contractionary zone and extended the streak to five months. The rate of contraction is not as severe as seen during the months of April and May (months with strict nationwide lockdown), but the pace of recovery has lost some steam. The localised lockdowns and restrictions have led to […]
What does the circular say? The circular states that, “In order to diversify the underlying investments of Multi Cap Funds across the large, mid and small cap companies and be true to label, it has been decided to partially modify the scheme characteristics of Multi Cap Fund.”Until now the funds under Multi Cap category were […]
Registering a sharp contraction in economic growth, the GDP number for Q1 of 20-21, has come at -23.90%, a deep fall, the worst ever, which is the direct consequence of the pandemic and the lockdown. A fall close to -20 % was more or less expected by a number of market participants. Even with some […]
The availability of data improved in the month of July, as the data was available from 95% and 92% of the urban and rural centres respectively from the earmarked centres. The quality of numbers has thus improved and may find due consideration from the policy makers. The headline CPI based inflation was reported at 6.93% […]
Status Quo on Rates Monetary Policy Committee of the RBI has left the base rates unchanged in the announcement today. This is on expected lines as the RBI was expected to maintain status quo and stress more on the accommodative stance, liquidity enhancement measures and restructuring of the loan portfolios. The cumulative reduction of policy […]
The uncertain trajectory: Three months back as we had gone into the shutdown it was very clear that the trajectory of both growth and inflation would be uncertain. This has found expression in the statements from the RBI too on more than one occasion. This uncertainty is due to two factors, one, that due to […]
The nationwide lockdown situation led to a contraction in IIP’s year-on-year growth numbers for the third consecutive month. After Apr’20, the lockdown continued in the month of May’20 as well. As such, it was expected that IIP numbers may continue to contract. The partial relaxation of lockdown measures led to easing in the pace of […]
The month of Apr’20 was in the eye of the pandemic storm and witnessed nationwide lockdown without any relaxations. As such, it was expected that IIP numbers may contract sharply. The assessment of the level of contraction varied across market participants. Many of the correspondents contributing to the IIP data reported “Nil” production for the […]
Given the lockdown conditions across the country, the headline CPI-based inflation numbers were not released for the month of May as well. The price data collection exercise has been in suspension since 19th Mar’20. The inflation data for only such commodities or services sub-groups was declared for which adequate trade data was available. Even as […]
The IIP growth witnessed a sharp contraction of 16.7% for the month of March 2020, as compared to 4.6% in the preceding month and 2.7% recorded during the year ago period. While street estimates expected a contraction in IIP growth, the actual numbers were worse than expectations. The corona virus pandemic affected the production facilities, […]
The National Statistics Office (NSO) in its CPI press release, provided index numbers for select sub-groups whereas headline inflation numbers were not declared owing to nationwide lockdown hindering the process of data collection. The data collection activities have been suspended with effect from 19th Mar’20. The inflation data for only such commodities or services sub-groups […]
Arbitrage Funds, Now? Most often the short-term investment landscape is dominated by overnight funds, liquid funds, and ultra-short tern funds. In the recent past due to volatility in the short-term rates some of these schemes except overnight funds have given occasionally negative returns. While such volatility may be a very short-lived phenomena, quite often the […]
Further to the note titled, “Bond Funds: In the Light of Robust Processes”, from Bhavesh Sanghvi, CEO, Emkay Wealth, on the real issues, immediately after the FT Event, we are pleased to share this brief note on the consequences of this event for the near future. A Crisis of Liquidity? There is a liquidity glut […]
It will be an understatement to say that oil prices have been volatile over the last two months. The prices have been broadly in between the US$ 40 and US$ 20 levels. The fundamental factors that have been at play for the oil economy has been the slowdown or sluggishness in the economies like China […]
The RBI released a statement today wherein it provided its assessment of the current state of the economy and some additional measures to tide over the current situation. The announcements made today are part of the Governor’s statement and not an outcome of MPC meet. Assessment of the Economy: As per the RBI’s assessment, in […]
Macro Variables – Are they relevant now? The major macro variables that we look at to gauge the direction of the economy and the markets are GDP, IIP, CPI etc. But these variables may remain not very relevant in the immediate future as they may not be assessed or estimated properly due to lack of […]
Update & Perspectives The four major factors that are of consequence for the fixed income or bond market are the policy of the central bank or the official interest rate policy, the liquidity conditions in the interbank market, the government borrowing program and the inflation trajectory. Each factor is detailed in the following paragraphs, along […]
The CPI based inflation numbers eased for the second consecutive month; after touching a high of 7.59% in the month of Jan’20, the headline inflation number for the month of Mar’20 came in at 5.91%. The core inflation numbers too maintained an easing trend. The latest inflation numbers are an estimation, as data collection efforts […]
The government borrowing program for the first half of 2020-21 has been announced. It is interesting to look at three features of the borrowing program from an investment perspective, that is the (i) spread of the borrowing program over H1 and H2, (ii) the maturity-wise concentration of the primary issues, and (iii) the month-wise distribution […]
In the Union Budget for 20-21, several measures were proposed to enhance the breadth and depth of the markets which included greater access for overseas investors, introduction of ETFs, and access to infrastructure investments with a tax holiday. The RBI has announced enhanced limits for foreign investments in governments securities and corporate bonds, and also […]
The RBI had been cognizant of the economic conditions and cut policy rates during the course of 2019, but it maintained a slow and steady approach. Over the last few months, the RBI’s headroom for direct support to growth was restricted owing to spike in inflation numbers, resulting in the central bank focusing rather on […]
There are some useful social welfare announcements from the Finance Minister this afternoon, focused on taking care of people who may be affected by the lockdown consequent to the pandemic. These measures should be understood in the correct perspective. These are not economic stimulus measures, but social welfare measures aimed at preserving the sustenance of […]
In the last few weeks, we have witnessed unprecedented volatility across asset classes, resulting from the sharp sell-off amidst flight to safety, generated by the fears around the economic impact of the pandemic. Under normal circumstances, the risk-off sentiment leads to money flowing into avenues traditionally considered as safe haven, such as debt. But in […]
THE FED ACTION The Fed has brought down the base rate to a range of 0% to 0.25%, bringing it back to the levels earlier seen during the recession of 2006-07. This coupled with the earlier cut of 0.50% is one of the deepest cuts the Fed has gone-in for in the recent history. The […]
