Expect A Tornado of Hot Air Around Indian Interest Rates

24.03.2017 • Emerging Markets

By Vivek Kaul – The Vivek Kaul Letter (India) –

The next meeting of the monetary policy committee of the Reserve Bank of India(RBI) is scheduled on April 5 and 6, 2017.

As John Lanchester writes in How to Speak Money: “Monetary means to do with interest-rates, and is controlled by the central bank.”

Around that time, the business media will go on an overdrive.

Economists will be called up and surveys will be run on by how much they expect the RBI to cut the repo rate.

After the monetary policy is in the public domain, more stories will be done on whether the RBI should have cut more, if it cuts the repo rate at all.

If it doesn’t cut the repo rate, then stories will be done around why the RBI should have cut the repo rate and by not cutting the repo rate how the central bank is hurting the economy.

Over the past few years as the RBI has cut the repo rate there has been a demand for greater interest rate cuts. Repo rate is the interest rate at which the RBI lends to banks, in case banks are short on funds.

It acts a sort of a benchmark for interest rates in general.

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