RBI’s Rajan says interest rate rise wasn’t due to global contagion

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  • India much better prepared than last time for forex outflows
  • need to remain vigilant of emerging market turmoil and not over react to short term events
  • RBI will act to reduce undue volatility

Yesterday the RBI hiked rates to 8% from 7.75% in an unexpected move

Author: Mike Paterson

Mike Paterson has more than 30 years of experience trading FX including key market-making roles as a senior spot trader with UBS and Credit Suisse. He was also head of FX at the State Bank of Victoria in London. With sizeable daily trading volumes Mike carved out a career combining professional integrity with a cynical grasp of seizing market opportunity. Since leaving the City, Mike has been working as an independent consultant and trading for himself, along with presenting seminars and writing for a number of publications. Mike now lives in Kent but remains a passionate sponsor of Southend United FC.


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Mike Paterson


  1. Some more comments from him this morning :

    Rise in MSP led to increase in rural wages
    * MNREGA partly responsible for rise in rural wages
    * Price of services going up steadily
    * Trying to curb spillover effects of food price inflation
    * Must push govt to up supply, cut pressure on food prices
    * In weak econ, we must wait for data before acting
    * Wanted to see if disinflation feeds into core inflation
    * Core inflation did not come down in a significant way
    * Would have liked to see stronger fall in core inflation
    * Deposit rates are attuned to high inflation
    * Trying to craft a path in environ where econ weak
    * Inflation control is in wider interest of people
    * RBI concerned about weak growth
    * To calibrate policy as we get closer to Mar 2015
    * Believe will reach 8% RBI panel aim on inflation
    * To take calibrated steps if disinflation path doesn’t play out
    * About 50% of oil co FX swaps will be due end-Mar
    * Repayments for oil swaps are well covered till Mar
    * Repayment of FX oil swaps due Mar well covered
    * Conduct term repos when liquidity tightening temporary

  2. Thanks Amit

  3. I am a happy person as I bought a house a year ago with a fixed interest rate :-)


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