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Rajan rate cut

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Rajan rate cut Empty Rajan rate cut

Post by truthbetold Thu Jan 15, 2015 9:52 am

Indian reserve bank governor Rajan cut interest rates unexpectedly earlier. Bank meeting was scheduled for February 1st week to discuss rate cut.

Finance minister and his team have been putting pressure on Rajan to pull the trigger on rates. They said a rate cut is overdue and it will spur economic activity.

Rate cut should help real estate activity.

What do you think?

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Post by truthbetold Thu Jan 15, 2015 12:12 pm

India related adrs and etfs are the only green stuff on Wall Street.

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Post by nevada Thu Jan 15, 2015 3:29 pm

Does it mean interest rate on NRI accounts will go down too? I have some funds in India earning 9% interest a year.

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Post by Vakavaka Pakapaka Thu Jan 15, 2015 4:05 pm

Rajan is helping Jaitley with the budget preparation.

Soon, CONmen will complain that Rajan is starting to wear a chaddi and hurting sikular minorities and Bihari Dalits (elections are coming).

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Post by Kris Fri Jan 16, 2015 12:15 am

truthbetold wrote:Indian reserve bank governor Rajan cut interest rates unexpectedly earlier. Bank meeting was scheduled for February 1st week to discuss rate cut.

Finance minister and his team have been putting pressure on Rajan to pull the trigger on rates. They said a rate cut is overdue and it will spur economic activity.

Rate cut should help real estate activity.

What do you think?
>>.I hope so.

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Post by rawemotions Fri Jan 16, 2015 12:14 pm

truthbetold wrote:Indian reserve bank governor Rajan cut interest rates unexpectedly earlier. Bank meeting was scheduled for February 1st week to discuss rate cut.

Finance minister and his team have been putting pressure on Rajan to pull the trigger on rates. They said a rate cut is overdue and it will spur economic activity.

Rate cut should help real estate activity.

What do you think?
I went over Rajan's interview with Prannoy. At one point in the interview, Rajan almost mentioned that interest rates do not matter for economic activity. I did not completely understand it.  It is an hour long interview and the segment comes somewhere in the middle. Perhaps somebody else can clarify what he meant.

Are you suggesting Rate cut will not help economic activity.

More than real estate, it is the capital intensive industries which benefit. For any real change it needs to be come down by atleast 300 basis points. NDA did this exactly as soon as Vajpayee came to power. He reduced 9% to around  6% and the Industries helped India handle sanctions.

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Post by truthbetold Sat Jan 17, 2015 10:59 pm

http://www.thehindu.com/business/Industry/promoters-should-absorb-losses-if-companies-fail-rbi-governor/article6797079.ece?homepage=true

Rajan's professional approach to the task of managing India's monetary policy is refreshing.  He could improve his messaging a little bit better to avoid creating political ripples. 

He was firm in his dealings with CBN abd KCR on firm loan issues despite any political pressures. AP and T state were forced pay for farmers loan waiver. He followed it up with holding form on interest cut till he is satisfied with conditions.

In the short term, BJP may find him not so easy to manipulate. But that is good for markets. A firm hand at RBI would reassure investors.

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Post by rawemotions Sun Jan 18, 2015 11:35 am

truthbetold wrote:http://www.thehindu.com/business/Industry/promoters-should-absorb-losses-if-companies-fail-rbi-governor/article6797079.ece?homepage=true

Rajan's professional approach to the task of managing India's monetary policy is refreshing.  He could improve his messaging a little bit better to avoid creating political ripples. 

He was firm in his dealings with CBN abd KCR on firm loan issues despite any political pressures. AP and T state were forced pay for farmers loan waiver. He followed it up with holding form on interest cut till he is satisfied with conditions.

In the short term, BJP may find him not so easy to manipulate. But that is good for markets. A firm hand at RBI would reassure investors.

Rajan's main point is that he does not want to take actions for short term reasons. His key point is that RBI will react only of any short term trend noticed is sustainable. He is focused on sustainable growth, and hence will fine tune policies, if he finds a sustainable budget and sustainable trends in external factors, that supports lower inflation. But still 250 basis points is not much. I hope it is a trend and will be further reduced. It needs at least 2000 basis points change for interest rates to actually help Industrialists. For the past 6 -7 years (thanks to the allegedly incompetent UPA), many industrialists are borrowing from abroad to escape the high interest rate regime in India, adding to external debt.

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Post by truthbetold Sun Jan 18, 2015 2:26 pm

Raw
Based on news accounts, rate cuts are likely to continue. I think I read some where that the goal is bring it to 6%. That makes mortgagerates around 8%. If they can offer those mortgage rates fixed for few years, it will help more lower middle class people to think of home ownership. All this based on good goverenance and better fiscal policy. The joker is international events and world economy.

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