India hiked key interest rates by a quarter point yesterday — its eighth hike in a year — as rising oil prices threaten to aggravate inflation in Asia’s third-largest economy.
The Reserve Bank of India also raised its inflation forecast for the year from 7 percent to 8 percent on high crude prices and rising manufacturing costs.
“The underlying inflationary pressures have accentuated, even as risks to growth are emerging,” the bank said.
As expected, the central bank raised the repo rate — at which it makes short-term loans to commercial banks — from 6.5 percent to 6.75 percent with immediate effect. It raised the reverse repo rate — at which it borrows from commercial banks — by 5.5 percent to 5.75 percent.
The Reserve Bank of India said it’s too early to assess the impact of the natural disaster in Japan on India’s economy, but warned that a turn from nuclear energy could exert further upward pressure on petroleum prices.
The central bank said India is on track to clock 8.6 percent growth this year, but cautioned that uncertain commodity prices could dampen the investment climate.
“Investment momentum may be slowing down,” the bank said, adding that its current anti-inflationary stance is likely to continue.
Rising prices, along with a crush of corruption scandals, have battered India’s ruling Congress Party coalition, spurring street protests in some places.
India’s latest inflation data — 8.3 percent for last month — took many by surprise and topped the bank’s own inflation forecasts by more than a percentage point.
“It’s no longer a food inflation problem,” HDFC Bank chief economist Abheek Barua said. “The economy seems to be showing signs of overheating.”
India imports about three-quarters of its oil and the government pays hefty subsidies on fuel. That means rising oil prices threaten to wreak havoc not just with inflation, but also with India’s current account and large fiscal deficit.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
Nano-X Imaging Ltd, a start-up founded by Israeli investor Ran Poliakine, is joining forces with South Korean chipmaker SK Hynix Inc to build a machine that could disrupt a century-old X-ray industry. Valued at about US$2 billion after listing on the NASDAQ last month, Nano-X is seeking to transform a multibillion-dollar industry that has essentially relied on the same technology since Nobel Prize in Physics winner Wilhelm Roentgen discovered X-rays in the late 19th century. Nano-X’s device uses semiconductors instead of metal filaments to generate X-rays. The backing of SK Hynix, the world’s second-largest maker of memory chips, is a boost for
Continental AG, which makes control units for Daimler AG cars, cannot pursue antitrust claims against a group of patent owners, including Qualcomm Inc, which are seeking royalties on telecommunications technology, a federal judge in Texas ruled. Avanci LLC, a licensing pool formed by Qualcomm, Nokia Oyj, Sharp Corp and other owners of patents on technology standards, is not breaching antitrust laws when it negotiates license agreements with automakers rather than the component makers, Barbara Lynn, chief district judge for the Northern District of Texas, said in dismissing the suit in a decision posted on Friday. The licensing group charges US$15 per vehicle
Sony Corp has cut its estimated Play Station 5 (PS5) production for this fiscal year by 4 million units, down to about 11 million, following production issues with its custom-designed system-on-chip (SOC) for the new console, people familiar with the matter said. The Tokyo-based electronics giant in July boosted orders with suppliers in anticipation of heightened demand for gaming in the holiday season and beyond, as people spend more time at home due to the COVID-19 pandemic. However, the company has come up against manufacturing issues, such as production yields as low as 50 percent for its SOC, which have cut into