Yesterday’s T-Bill auctions were the first after the rate hike and there has been a spike (Only 91 day and 364 day t-bills were auctioned yesterday, 182 day T-Bills will happen next wednesday) The 10 year bond yield had spiked on Tuesday to about 8.44%. Effectively people are willing to pay more for a 1 [...]

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The RBI increased Repo rates to 8% (from 7.50%), a 50 basis point increase. Repo is what banks pay to borrow overnight from the RBI, a key rate that is usually the floor for inter-bank lending rates and thus interest rates in the system. Reverse repo (or what banks get for parking money with the [...]

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Look at the first point in the First Quarter Review: Taming inflation warrants continuation of anti-inflationary monetary stance Inflation risks stay, while growth showed signs of moderation. On current reckoning, growth is likely to stay around trend growth of around 8.0 per cent. However, downside risks have increased. Overall some moderation in growth is expected [...]

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The ECB raised interest rates by 25bps (or 0.25%) to 1.5%. China recently raised rates, by 25bps, to 6.56%. Sweden also pushed its rates up to 2%, while Australia held rates steady at 4.75%. Malaysia hiked the Bank Cash Reserve Ratio (CRR) to 4% (from 3%), while keeping overnight rates at 3%. CRR is the [...]

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From CNBC: Brazil’s and India’s government yield curves are inverting, a condition in which short-term rates rise above longer yields. Historically, such an inversion almost invariably precedes a recession, as investors temporarily accept lower long rates in anticipation of the decline in yields that typically accompanies an economic downturn. (HT: Deepak Singh) At this point [...]

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The RBI is unhappy about inflation, it seems. To a large extent, inflation is caused by an increase in the money supply, largely by the central bank adding money. [1] Summary: There are only that many rupees available today, as much as RBI has “printed” or has in reserve. If the RBI prints more money [...]

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In my latest at Yahoo I write on how stocks were Spooked By The RBI. (Reproduced in entirety) On May 3, the Reserve Bank of India announced the annual monetary policy and soon after, stock markets dipped 2.5%, with some stocks falling as much as 10%….

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In the annual policy statement release, RBI has significantly changed its stance from "We don’t want to tighten too much and hurt growth" to "Holy moly, we have to stop this inflation thing, even if it means lower growth". In…

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RBI today increased the Repo rate by 0.25% to 6.75%. Repo is what banks pay the RBI for overnight (1 to 3 days) borrowing. Reverse repo, or what the RBI pays for excess cash parked with them, is up to 5.75%. Please don’t consider this a big deal just …

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HDFC Bank and ICICI Bank have both hiked up lending rates by about 50 bps, says ET. This takes ICICI’s base rate to 8.25% and HDFC Bank’s base rate to 8.2%. Banks can’t lend below the base rate. Most existing customer loans are linked to a "Benchm…

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