News: Headline inflation in the US has reached 6.8%, the highest value in 40 years. In this context, if the US Federal Reserve resort to monetary tightening policy (Fed Tapering) to control inflation, it will have important consequences for the world economy. What are the implications of Fed tapering? Flight of capital from the emerging… Continue reading The question of US monetary policy
Tag: monetary policies
The monetary policy of RBI has failed to walk its talk
Synopsis: A disconnect between the commentary and policy action of RBI’s repo rate-setting panel could cost us dear in time to come. Introduction According to RBI Governor, the Indian Economy is recovering from the impact of Covid. But still, there is a need to work on inflation, so that it will remain within the targets defined.… Continue reading The monetary policy of RBI has failed to walk its talk
A flawed calculation of inflation
Synopsis: The current official inflation rate does not correctly measure price rise and it needs modification. Contents1 Introduction2 Does the official data capture the real picture?3 Why inflation is a cause of worry?4 What are the factors contributing to inflation? Introduction Inflation for the last four months has been worryingly high. Wholesale price index (WPI)… Continue reading A flawed calculation of inflation
Transient easing: On inflation
Synopsis: Cutting fuel taxes is a sure-shot way to address a major component of price pressures. Introduction The latest retail inflation data suggest, that price pressures have begun to moderate in the economy, with CPI showing inflation having slowed for a second month to 5.3%, after July’s 5.59%. However, price trends among the constituents of… Continue reading Transient easing: On inflation
Let central banks stay focused on their goals
Synopsis: Urjit Patel has suggested adding climate aims to the monetary agenda, however it has multiple risks associated to it. Hence, other tools should be used for our carbon crisis. Introduction Recently, former Reserve Bank of India (RBI) governor Urjit Patel laid out a strong argument in favour of the proposition of adding climate goals… Continue reading Let central banks stay focused on their goals
If inflation remains elevated, Monetary Policy Committee could lose credibility. This must be avoided
Contents1 What is the news?2 What does the recent GDP data indicate?3 What concerns are being raised wrt RBI’s current policy?4 What is RBI’s view on policy normalisation? What is the news? RBI Governor has expressed optimism over the state of the economy. Speaking at an event organized by The Indian Express and the Financial… Continue reading If inflation remains elevated, Monetary Policy Committee could lose credibility. This must be avoided
No taper tantrum (On US Fed reserve policies)
Source: Business Standard What is the news? The US Fed Reserve is considering reducing the pace of its asset purchase. As per Fed’s Chairman, the economy had evolved as expected, and it could be appropriate to start reducing asset purchase this year. But, it’s not clear at this stage as to when the Fed will… Continue reading No taper tantrum (On US Fed reserve policies)
RBI announces Open Market Purchase under G-sec Acquisition Programme 2.0
Source: The Hindu Contents1 What is the News?2 About G-Sec Acquisition Programme(G-SAP):3 Aim of G-SAP:4 Benefits of G-SAP:5 Concerns: What is the News? Reserve Bank of India(RBI) has announced that it will conduct an open market purchase of government securities worth Rs 25,000 crore under the G-sec Acquisition Programme (G-SAP 2.0). About G-Sec Acquisition Programme(G-SAP):… Continue reading RBI announces Open Market Purchase under G-sec Acquisition Programme 2.0
Why RBI disagrees with market perception on policy normalization?
Source: Business Standard What is the news? RBI’s decision to conduct variable reverse repo (VRRR) auctions should not be considered as a reversal of the accommodative policy stance. Background Recently, RBI while announcing the review of the monetary policy, said the central bank has decided to conduct fortnightly VRRR auctions. However, RBI Governor categorically stated that… Continue reading Why RBI disagrees with market perception on policy normalization?
Spreading disinflation over 2-3 years to reduce output loss, says RBI
Source: Business Standard Relevance: Addressing various issues ailing the financial sector of the Indian economy. Synopsis: RBI Governor Shaktikanta Das, other deputy governors took questions from the media and addressed the raging topics in the financial sector. Here is what he had to say regarding RBI’s view on various issues. On inflation Between 2016 and… Continue reading Spreading disinflation over 2-3 years to reduce output loss, says RBI
