5 charts that you need to see before RBI's bi-monthly policy review
While many experts expect no change in interest rates by Rajan this time around, there are chances that he could surprise many as he has done so twice in the past year and half .
All eyes are on Reserve Bank of India (RBI) governor Raghuram Rajan as he announce the bi-monthly policy review on today. While many experts expect no change in interest rates by Rajan this time around, there are chances that he could surprise many as he has done so twice in the past year and half.
Repo rate, or the benchmark interest rate below which commercial banks cannot loan money to customers, is currently at 6.50%.
Here are five charts that you need to see before the RBI bi-monthly policy review that could give a glimpse into Rajan's next step.
1. India's inflation rate
Though India's retail inflation had increased to 5.39% in April 2016 from 4.83% in the previous month and has been higher than market expectations of 5%. Food inflation too reached a three-month high. This has been higher than RBI's target of 5%.
2. Index of Industrial Production:
Industrial output in India increased a meager 0.1% year-on-year in March of 2016, slowing sharply from a 2% rise in the previous month and much lower than market expectations of a 2.5% gain. Manufacturing fell by 1.2%, followed by food production and beverages, and publishing, printing and reproduction.
3. Interest rates:
The RBI cut its benchmark repo rate by 25 basis points to 6.5% during the meeting held on April 5, 2016, as widely expected. It is the first reduction since September 2015 and the lowest rate since January 2011. At the same time, the bank unexpectedly raised the reverse repo by 25 bps to 6.0%.
4. Wholesale Price Index:
Indian wholesale prices unexpectedly rose 0.34% year-on-year in April of 2016, following a 0.85% drop in March and market consensus of a 0.2% fall. It is the first increase since November 2014 as prices of food and cost of manufactured products rose while cost of petrol declined at a slower pace.
5. Unemployment Rate:
Unemployment Rate in India decreased to 4.90% in 2013 from 5.20% in 2012. Unemployment Rate in India averaged 7.32% from 1983 until 2013, reaching an all time high of 9.40% in 2009 and a record low of 4.90% in 2013.