India’s central bank yesterday surprised markets by suspending its version of quantitative easing, signaling the start of tapering COVID-19 pandemic-era stimulus measures as an economic recovery takes hold.
There is no need for further bond-buying, Reserve Bank of India Governor Shaktikanta Das said in an online broadcast, while stressing that the step is not a reversal of its accommodative policy stance.
The bank will be ready to resume purchases if needed, he said.
Bonds were mixed. The yield on the benchmark 10-year bond climbed 4 basis points after Das announced discontinuing the Government Securities Acquisition Programme (GSAP), bucking market expectations for only trimming
ETMarkets Morning Podcast (ET Online) RBI says 4% inflation target ideal
07:07 Min | December 29, 2020, 9:02 AM IST
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Hi there! Welcome to ETMarkets Morning, the show about money, business and markets. I am Nandini Sanyal, and here is what we have to start your day. Building materials stocks emerge new comeback kid Future Retail urges Sebi to clear deal with RIL RBI says 4% inflation target ideal
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And there is more. But first, a quick glance at the state of the markets.. Nifty futures on the Singapore Exchange traded 33.75 points higher at 7:45 am (IST), signalling a bounce ahead on Dalal Street.
4% inflation target is ideal as it matches average trend since 2014, says RBI paper
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Synopsis
The real time estimate of trend inflation was around 5% till the end of 2013, while it fell steadily to 4.1% in the first quarter of 2019, before rising to breach the 6% upper tolerance limit during the last nine months due to COVID-19 pandemic-led disruptions.
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RBI projected CPI to be at 6.8% for the third quarter, 5.8% for the fourth quarter and 5.2-4.6% in the first half of next fiscal.
A 4% inflation target for the Indian Monetary Policy Committee is just ideal as it matches with the average trend inflation measured since 2014, a Reserve Bank of India research paper said.