India's central bank raised its key interest rate by 25 basis points and indicated that it is open to the possibility of further rate increases, as core inflation stays elevated.
The increase in the key repo rate by 25 basis points to 6.5 per cent on Wednesday was in line with expectations.
But remarks by the governor of the Reserve Bank of India, Shaktikanta Das, which pointed to potential further tightening, surprised markets.
“We need to see a decisive moderation in inflation,” Mr Das said. “We have to remain unwavering in our commitment to bring down inflation.”
The RBI forecast inflation at 6.5 per cent in the April 2022 to March 2023 financial year, coming down to 5.3 per cent in the next financial year.
“Considerable uncertainties remain on the likely trajectory of global commodity prices, including [the] price of crude oil,” Mr Das said.
Despite this, he was upbeat about India's economy, saying that it was resilient.
The RBI is projecting gross domestic product growth of 6.4 per cent in the current financial year.
High inflation became a pressing issue last year in India, partly due to the effect on commodity prices of Russia's war in Ukraine.
Food prices also rose as crops were destroyed by extreme weather in parts of India.
To tackle high prices the RBI has raised interest rates six times, by a total of 250 bps, since May last year.
“The continued rate hikes by the Bank of England, the ECB [European Central Bank] and the US Federal Reserve and the implications of these in the foreign exchange market influenced the decision of the Reserve Bank of India to go for another rate hike,” said Sujan Hajra, chief economist and executive director at Anand Rathi Shares and Stock Brokers in Mumbai.
But its latest rate increase was smaller than previous increases, as inflation in India eased recently.
Retail inflation came down to a one-year low of 5.72 per cent in December on softening food prices.
This is within the RBI's target of keeping inflation between 2 per cent and 6 per cent.
Assuming that inflation remains under control, some economists expect Wednesday's rate increase to be the last change in the current cycle, despite the RBI's hints that it is open to further rate increases.
“Unless there is an unexpected flare in inflation, we would expect the Reserve Bank of India to maintain an unchanged policy rate for the remainder of 2023,” Mr Hajra said.
“This would be positive both for the debt and equity markets.”
But others believe there is scope for another small raise.
“Inflection points are always difficult to call, but I think that the rate hiking cycle of the RBI may not yet be over,” said Indranil Pan, chief economist at Indian private lender Yes Bank.
“We remain open to another 25 basis-point increase in the repo rate in April or even later and [the move] will critically depend on the inflation prints in the months ahead."
The latest rate increase will further raise the cost of borrowing as it gets passed on to consumers and businesses taking out loans.
“There is no denying the fact that the increase in the repo rate would definitely [affect] housing affordability,” said Ramani Sastri, chairman and managing director of Sterling Developers.
“The repeated rate hikes may have a short-term impact on overall housing demand. This comes at a time when the real estate sector had shown recovery.”
The benchmark S&P BSE Sensex gave up some of its earlier gains following the RBI's rate announcement, but it remained in positive territory in morning trade.
The India rupee was flat at about 82.6 against the US dollar.
But some analysts expect the rupee to weaken. It “now looks poised to see 83 or even 83.4”, said Anand James, chief market strategist at Geojit Financial Services.
A weaker rupee enables Indians working in the UAE and other GCC states to send more money home.
“Remittance growth for India in the first half [of the current financial year] was around 26 per cent, more than twice the World Bank’s projection for the year,” said the RBI's Mr Das.
“This is likely to remain robust owing to better growth prospects of the Gulf countries.”
Common%20symptoms%20of%20MS
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Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants
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The specs
Common to all models unless otherwise stated
Engine: 4-cylinder 2-litre T-GDi
0-100kph: 5.3 seconds (Elantra); 5.5 seconds (Kona); 6.1 seconds (Veloster)
Power: 276hp
Torque: 392Nm
Transmission: 6-Speed Manual/ 8-Speed Dual Clutch FWD
Price: TBC
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
SPEC%20SHEET%3A%20SAMSUNG%20GALAXY%20Z%20FOLD%204
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UAE currency: the story behind the money in your pockets
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
UAE currency: the story behind the money in your pockets
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
COMPANY%20PROFILE%20
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Sly%20Cooper%20and%20the%20Thievius%20Raccoonus
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
The Bio
Favourite holiday destination: Either Kazakhstan or Montenegro. I’ve been involved in events in both countries and they are just stunning.
Favourite book: I am a huge of Robin Cook’s medical thrillers, which I suppose is quite apt right now. My mother introduced me to them back home in New Zealand.
Favourite film or television programme: Forrest Gump is my favourite film, that’s never been up for debate. I love watching repeats of Mash as well.
Inspiration: My late father moulded me into the man I am today. I would also say disappointment and sadness are great motivators. There are times when events have brought me to my knees but it has also made me determined not to let them get the better of me.
GIANT REVIEW
Starring: Amir El-Masry, Pierce Brosnan
Director: Athale
Rating: 4/5
Globalization and its Discontents Revisited
Joseph E. Stiglitz
W. W. Norton & Company
ONCE UPON A TIME IN GAZA
Starring: Nader Abd Alhay, Majd Eid, Ramzi Maqdisi
Directors: Tarzan and Arab Nasser
Rating: 4.5/5
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Zayed Sustainability Prize
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
JOKE'S%20ON%20YOU
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Groom and Two Brides
Director: Elie Semaan
Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla
Rating: 3/5
How Filipinos in the UAE invest
A recent survey of 10,000 Filipino expatriates in the UAE found that 82 per cent have plans to invest, primarily in property. This is significantly higher than the 2014 poll showing only two out of 10 Filipinos planned to invest.
Fifty-five percent said they plan to invest in property, according to the poll conducted by the New Perspective Media Group, organiser of the Philippine Property and Investment Exhibition. Acquiring a franchised business or starting up a small business was preferred by 25 per cent and 15 per cent said they will invest in mutual funds. The rest said they are keen to invest in insurance (3 per cent) and gold (2 per cent).
Of the 5,500 respondents who preferred property as their primary investment, 54 per cent said they plan to make the purchase within the next year. Manila was the top location, preferred by 53 per cent.
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
'Of Love & War'
Lynsey Addario, Penguin Press
Know your cyber adversaries
Cryptojacking: Compromises a device or network to mine cryptocurrencies without an organisation's knowledge.
Distributed denial-of-service: Floods systems, servers or networks with information, effectively blocking them.
Man-in-the-middle attack: Intercepts two-way communication to obtain information, spy on participants or alter the outcome.
Malware: Installs itself in a network when a user clicks on a compromised link or email attachment.
Phishing: Aims to secure personal information, such as passwords and credit card numbers.
Ransomware: Encrypts user data, denying access and demands a payment to decrypt it.
Spyware: Collects information without the user's knowledge, which is then passed on to bad actors.
Trojans: Create a backdoor into systems, which becomes a point of entry for an attack.
Viruses: Infect applications in a system and replicate themselves as they go, just like their biological counterparts.
Worms: Send copies of themselves to other users or contacts. They don't attack the system, but they overload it.
Zero-day exploit: Exploits a vulnerability in software before a fix is found.
FIVE%20TRENDS%20THAT%20WILL%20SHAPE%20UAE%20BANKING
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