India revises repo rate down as expected
India’s central bank has cut its key interest rate for the first time this year, moving it downwards by 0.25 basis points to 6.5 percent.
The move came after the first bi-monthly monetary policy review for the 2016-17 fiscal, which began on April 1st, in which Royal Bank of India’s governor Raghuram Rajan said that “a reduction in the policy rate by 0.25 percent will help strengthen growth.”
He also added that, “retail inflation measured by the consumer price index (CPI) dropped sharply in February after rising for six consecutive months.”
Interest rates in the country are now at their lowest for five years. The RBI also retained its GDP growth forecast at 7.6 per cent.
Oil lower, bringing down Asia
US Crude fell 3 percent in trading on Monday, after hopes of an output curb at a meeting in Qatar later this month begin to fade.
Japan’s Nikkei 225 closed down 2.4 percent, marking the sixth negative session in a row, with South Korea’s Kospi also down 0.8 percent. Oil prices also forced down US stocks yesterday.
Supply has outstripped demand for months, causing oil prices to plummet 70 percent to record lows. A meeting between OPEC and non-OPEC producers on April 17th had hoped to reach an output agreement, but investors are seeming to be losing hope of a productive outcome.
Lagard warns of loss of growth in advanced economies
International Monetary Fund director Christine Lagarde has urged governments to prepare for increasing threats to the global economy in a speech at Goethe University in Frankfurt.
Lagarde said, “the good news is that the recovery continues. We have growth. We are not in a crisis. The not-so-good news is that the recovery remains too slow, too fragile, and risks to its durability are increasing.”
“We are on alert, not alarm. There has been a loss of growth momentum. However, if policymakers can confront the challenges and act together, the positive effects on global confidence, and the global economy, will be substantial.”
Lagarde also called for governments to take their own actions to encourage economic growth, rather than relying on central banks to keep interest rates low and print electronic money.
Several factors have caused a weak start to the economic year, including a slowdown in China and the continuing rock bottom oil prices. UK Chancellor George Osborne has also given similar warnings, citing January’s turbulence in the markets to encourage investors not to be complacent.
05/04/2016