Readings: CRR Hike, Deposit & lending rates, YVR interview
India’s central bank unexpectedly ordered lenders to set aside more reserves for a fourth time this year to prevent “unacceptably high” inflows of foreign cash from reigniting inflation.
India and China are restricting bank lending to prevent asset bubbles from spurring inflation in the world’s two fastest growing economies. The stock markets of the two Asian nations have added a combined $3 trillion this year, more than doubling their market capitalization.
- Financial Express: Banks put lending, deposit rates cut on hold
The profitability of my bank post the CRR hike may be hit to a small extent. But we don’t want to go for rate cuts in either deposit or even lending right at the moment,’’ said Chanda Kochhar, joint MD, ICICI Bank.
“the CRR hike will add to the funding cost of majority of the banks since no interest is paid on CRR balances. The bank’s ability to cut interest rates on advances would thus be restrained.”
- Business Standard: Uncertainties are highly uncertain (WTF ?!)
RBI Governor Y V Reddy says raising the retail prices of oil may push the headline inflation to 5 per cent.
“I think we must make a distinction between the pass-through of the oil price increase that has already happened and any increase that may happen. We do not know how the increase in prices that have already happened will be passed. It will take place — in two months, three months, nine months — unless there is a reversal in oil prices. And that reversal does not seem likely”.
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