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Tag Archive: Monetary policy


The Media analyst, Financial analyst all have been keenly waiting for today’s RBI policy. The question is will the RBI reduce rates orblog keep them as  Status quo . Well I do not know the answer just sharing the observations there might be a pressure from finance minister to reduce the rates but RBI might not as the inflation is still not in the comfortable zone of RBI.

Well let the various analysts predict the policy, I would prefer sharing some basic definition of money from RBI, Continue reading

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From the last Monetary policy RBI has started publishing Post Policy Conference Call with Researchers and Analysts providing transparency.BTXtODVCQAALUaw

There are a lot of questions on the interest rates including MSF, LAF and OMOs.

You can read the full edited script on RBI Website

With reference to the above lets focus on The “term structure” of interest rates refers to the relationship between bonds of different terms. When interest rates of bonds are plotted against their terms, this is called the “yield curve”. Economists and investors believe that the shape of the yield curve reflects the market’s future expectation for interest rates and the conditions for monetary policy.

Usually, longer term interest rates are higher than shorter term interest rates. This is called a “normal yield curve” and is thought to reflect the higher “inflation-risk premium” that investors demand for longer term bonds. Continue reading

Good morning so the RBI New rates effective 29.10.2013 are :BTXtODVCQAALUaw

*Bank Rate:8.75%
*Repo Rate:7.75%
*Reverse Repo Rate:6.75%
*MSF Rate:8.75%
*Cash Reserve Ratio:4%
*SLR:23%

Well those are the rates where the governor Raghuram Rajan in his first “real” policy, increased the repo rate by 0.25% to 7.75% and cut the MSF rate by 0.25% to 8.75%. Reverse repo goes to 6.75%.

Well the above would be more clear providing you Continue reading

Yesterday RBI said:813530
reduce the marginal standing facility (MSF) rate by 75 basis points from 10.25 per cent to 9.5 per cent with immediate effect;
– reduce the minimum daily maintenance of the cash reserve ratio (CRR) from 99 per cent of the requirement to 95 per cent effective from the fortnight beginning September 21, 2013, while keeping the CRR unchanged at 4.0 per cent; and
– increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.25 per cent to 7.5 per cent with immediate effect.

You did not understand that? Neither did I.  Continue reading

In the recent past the financial media has glamorize the Free fall of the rupee and its been showcased as mere panic to the viewers, one of imagesthe major reason you should better be watching National geographic channel or Discovery.

Here are some thoughts on the financial development of India

We have reversed financial development, we have messed up the operating procedure of monetary policy, we have created chaos in the short end of the bond market, we have impeded Indian households taking refuge from high inflation by purchasing gold, we have resurrected gold smuggling, we have raised the possibility of reversing trade reforms. In return for what?

There are numerous problems that require the attention of the government. :-   Continue reading

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