India’s central bank cut interest rates yesterday in a move seen as a boost to Indian Prime Minister Narendra Modi ahead of general elections this year.
The Reserve Bank of India (RBI) said the benchmark repo rate — the level at which it lends to commercial banks — would be reduced by 25 basis points to 6.25 percent.
It marked the first interest rate decision under new Governor Shaktikanta Das, an ally of Modi who was appointed in December last year after his predecessor, Urjit Patel, quit following a public spat with the administration over alleged government interference.
Photo: Reuters
The government was believed to be unhappy with the RBI over a number of issues, including its apparent reluctance to cut rates.
India’s finance ministry had reportedly been pressuring the bank to enact policies to help spur growth ahead of the elections, when Modi will run for a second term.
On Wednesday, a key economic adviser to Modi called on the RBI to slice rates to help boost consumption and investment.
Rajiv Kumar, vice chairman of government think tank NITI Aayog, said the bank should act to help spur “higher growth rates.”
Data showed the economy expanded 7.1 percent year-on-year in July-to-September quarter, down from 8.2 percent in the previous quarter.
Yesterday’s cut surprised the majority of analysts who had expected rates to be held. Thirty two out of 43 economists surveyed by Bloomberg News had predicted no change.
The RBI raised rates twice last year over concerns about inflation.
Consumer prices rose 2.2 percent in December, an 18-month low, well below the Reserve Bank of India’s medium-term target of 4 percent.
Falling food prices have been the main driver of the inflation slowdown, though the core measure — which excludes food and fuel costs — remains elevated.
“Headline inflation is projected to remain soft in the near term,” the central bank said in a statement yesterday.
The decisions are in line with achieving the medium-term inflation target, while supporting growth, it said.
The monetary stimulus is what Modi’s government needs to stoke economic growth, after it unveiled an expansionary budget last week, which included US$13 billion of consumer stimulus ahead of the general elections.
The central bank forecast GDP growth in the year starting April 1 at 7.4 percent, the same as the number it projected in December for the current financial year.
Additional reporting by Bloomberg
China’s economic planning agency yesterday outlined details of measures aimed at boosting the economy, but refrained from major spending initiatives. The piecemeal nature of the plans announced yesterday appeared to disappoint investors who were hoping for bolder moves, and the Shanghai Composite Index gave up a 10 percent initial gain as markets reopened after a weeklong holiday to end 4.59 percent higher, while Hong Kong’s Hang Seng Index dived 9.41 percent. Chinese National Development and Reform Commission Chairman Zheng Shanjie (鄭珊潔) said the government would frontload 100 billion yuan (US$14.2 billion) in spending from the government’s budget for next year in addition
Advanced Micro Devices Inc (AMD) suffered its biggest stock decline in more than a month after the company unveiled new artificial intelligence (AI) chips, but did not provide hoped-for information on customers or financial performance. The stock slid 4 percent to US$164.18 on Thursday, the biggest single-day drop since Sept. 3. Shares of the company remain up 11 percent this year. AMD has emerged as the biggest contender to Nvidia Corp in the lucrative market of AI processors. The company’s latest chips would exceed some capabilities of its rival, AMD chief executive officer Lisa Su (蘇姿丰) said at an event hosted by
AVIATION: Despite production issues in the US, the Taoyuan-based airline expects to receive 24 passenger planes on schedule, while one freight plane is delayed The ongoing strike at Boeing Co has had only a minor impact on China Airlines Ltd (CAL, 中華航空), although the delivery of a new cargo jet might be postponed, CAL chairman Hsieh Su-chien (謝世謙) said on Saturday. The 24 Boeing 787-9 passenger aircraft on order would be delivered on schedule from next year to 2028, while one 777F freight aircraft would be delayed, Hsieh told reporters at a company event. Boeing, which announced a decision on Friday to cut 17,000 jobs — about one-tenth of its workforce — is facing a strike by 33,000 US west coast workers that has halted production
TECH JUGGERNAUT: TSMC shares have more than doubled since ChatGPT’s launch in late 2022, as demand for cutting-edge artificial intelligence chips remains high Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday posted a better-than-expected 39 percent rise in quarterly revenue, assuaging concerns that artificial intelligence (AI) hardware spending is beginning to taper off. The main chipmaker for Nvidia Corp and Apple Inc reported third-quarter sales of NT$759.69 billion (US$23.6 billion), compared with the average analyst projection of NT$748 billion. For last month alone, TSMC reported revenue jumped 39.6 percent year-on-year to NT$251.87 billion. Taiwan’s largest company is to disclose its full third-quarter earnings on Thursday next week and update its outlook. Hsinchu-based TSMC produces the cutting-edge chips needed to train AI. The company now makes more
RSS