India’s central bank did the ‘wrong thing’ by not cutting interest rates, Mark Mobius says

India’s central bank was wrong to keep its benchmark interest rates unchanged on Thursday, according to veteran emerging markets investor Mark Mobius. The Reserve Bank of India surprised markets by keeping its repo rate — the rate at which it lends to other banks — unchanged at 5.15%. Prior to the decision, economists predicted a sixth rate cut from the central bank amid a notable slowdown in the Indian economy. “I think they did the wrong thing,” Mobius, who is founding partner at Mobius Capita


India’s central bank was wrong to keep its benchmark interest rates unchanged on Thursday, according to veteran emerging markets investor Mark Mobius.
The Reserve Bank of India surprised markets by keeping its repo rate — the rate at which it lends to other banks — unchanged at 5.15%.
Prior to the decision, economists predicted a sixth rate cut from the central bank amid a notable slowdown in the Indian economy.
“I think they did the wrong thing,” Mobius, who is founding partner at Mobius Capita
India’s central bank did the ‘wrong thing’ by not cutting interest rates, Mark Mobius says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, wrong, adjustment, mark, thing, rate, interest, bank, indias, rates, mobius, think, central, struggled, unchanged, cutting, tax


India's central bank did the 'wrong thing' by not cutting interest rates, Mark Mobius says

India’s central bank was wrong to keep its benchmark interest rates unchanged on Thursday, according to veteran emerging markets investor Mark Mobius.

The Reserve Bank of India surprised markets by keeping its repo rate — the rate at which it lends to other banks — unchanged at 5.15%. Prior to the decision, economists predicted a sixth rate cut from the central bank amid a notable slowdown in the Indian economy.

“I think they did the wrong thing,” Mobius, who is founding partner at Mobius Capital Partners, told CNBC’s “Street Signs” on Friday about the RBI. “I think they were reacting to the short-term situation with inflation, which is mainly caused by food prices, and, specifically, onion prices.”

In October, India’s annual retail inflation rose to 4.62% on the back of higher food prices, Reuters reported. That was a tick above the RBI’s medium-term target of 4%.

“They should have lowered rates,” Mobius said, adding it could improve business confidence in the country and may help to solve some of the debt problems in India’s financial services sector. He explained that the country is “going through a big adjustment right now because of the reforms that have taken place, particularly on the taxation side,” referring to Prime Minister Narendra Modi’s landmark Goods and Services Tax reforms.

The government has struggled to collect sufficient revenue since its new tax schemes went into effect in mid-2017. Recent reports said the GST structure is set to be reviewed.

“This is an adjustment that people have to be accustomed to and it takes time. But next year, I believe that this will do well — they would have made this adjustment and realize the reforms are having an impact,” Mobius said, adding he remains bullish on India. Many micro, small and medium-sized businesses have struggled as a result of the new value-added taxes.


Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, wrong, adjustment, mark, thing, rate, interest, bank, indias, rates, mobius, think, central, struggled, unchanged, cutting, tax


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Blowout jobs report means Fed may sound even less likely to move on interest rates

November’s surprisingly strong jobs report makes it less likely the Fed will move to cut interest rates, and it could sound even more hawkish when it meets next week. A so-called hawkish Fed is one that is more likely to move to tighten policy than make it looser by cutting interest rates or taking other measures. Stocks jumped and bond yields initially rose after the jobs report was released. Swonk said the jobs report showed the impact from trade, and that will be an important topic for the Fe


November’s surprisingly strong jobs report makes it less likely the Fed will move to cut interest rates, and it could sound even more hawkish when it meets next week.
A so-called hawkish Fed is one that is more likely to move to tighten policy than make it looser by cutting interest rates or taking other measures.
Stocks jumped and bond yields initially rose after the jobs report was released.
Swonk said the jobs report showed the impact from trade, and that will be an important topic for the Fe
Blowout jobs report means Fed may sound even less likely to move on interest rates Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: patti domm
Keywords: news, cnbc, companies, blowout, meeting, means, likely, market, fed, trade, sound, cut, rates, think, interest, report, jobs


Blowout jobs report means Fed may sound even less likely to move on interest rates

A hiring sign is displayed in a business window along a shopping street in lower Manhattan on July 05, 2019 in New York City.

November’s surprisingly strong jobs report makes it less likely the Fed will move to cut interest rates, and it could sound even more hawkish when it meets next week.

A so-called hawkish Fed is one that is more likely to move to tighten policy than make it looser by cutting interest rates or taking other measures. After three cuts this year, the Fed has signaled a neutral stance, where it is on hold but watching economic data.

The 266,000 jobs added in November is an important number since it defies expectations, at least for one month, that the labor market is slowing down. The report was much better than the 187,000 jobs expected by economists.

The end of the GM strike helped inflate the number, with 41,300 jobs added in motor vehicles and parts, but the overall gain in payrolls was still about 100,000 better than expected by many economists. Manufacturing gained 54,000 overall.

“The bottom line is the labor market is cooking. It clearly says the Fed should not do anything more. The Fed can now sit back on the shelf, not have to worry about having to be pestered about lower rates,” said Ward McCarthy, chief financial economist at Jefferies.

Stocks jumped and bond yields initially rose after the jobs report was released. The fed funds futures market moved to erase one rate cut that was priced in for next year, and the market was pricing just about 20 basis points of one quarter point cut in morning trading, according to Michael Schumacher, director of rates at Wells Fargo Securities.

“The Fed was made more of a sideshow with this number,” said Schumacher. “You think back to [Fed Chairman Jerome] Powell’s comments of the last month or two. It seems to me he doesn’t want to cut again. This takes away a little more impetus to cut.”

The focus of the market in the week ahead is likely to be more riveted on trade than the Fed, because of President Donald Trump’s looming Dec. 15 deadline on $156 billion in new tariffs on China, if there’s no trade deal.

Strategists expect the Fed to leave its economic forecasts and interest rate outlook little changed when it releases new projections after its Wednesday meeting. The Fed has emphasized that it is on hold as long as the economy continues to show a moderate pace of growth and low inflation.

“They’re pretty comfortable where things are at, and as long as we get a trade truce, they’re fine,” said Diane Swonk, chief economist at Grant Thornton. “There were people who wanted to sound a lot more hawkish at that last meeting. They did get two dissenters not wanting to cut rates further and many presidents going into the meeting saying we didn’t need an additional cut.”

Swonk said the jobs report showed the impact from trade, and that will be an important topic for the Fed. The gain in manufacturing, an area hit by trade wars, is still lagging, with most of the gains coming from the GM workers.

“Forty percent of the gains were in health care and leisure and hospitality, with food services driving it. Anything not affected by trade is holding up,” she said, but she added that retail is weak as online retail continues to take jobs from brick-and-mortar stores.

Ian Lyngen, head of fixed income strategy at BMO, said while it is unlikely, the strong jobs report has raised the question of whether the Fed would actually consider raising interest rates next year.

“I still think they cannot hike as long as the labor market is strong and growth is okay, but they don’t have inflation,” said Lyngen. “Inflation is a bigger deal to this Fed than what’s going on in a very tight labor market.”

Swonk said the Fed is still more likely to move to cut than raise interest rates.

“I think they will wait and see. I think much depends now whether the tariffs are rolled back. The biggest issue for the Fed is do we get more of a detente in the trade war that allows them to firmly stand on the sidelines,” Swonk said.

John Briggs, NatWest Markets head of strategy, said traders were already expecting a hawkish Fed at the meeting next week because they had expected no change in the Fed’s rate cut forecast. Now, the strong jobs number could make the Fed’s tone sound even more so, when Powell briefs the media after the meeting Wednesday afternoon.

“We expect a good holiday season, and the job market just continues to power ahead and support the consumer,” said Briggs. “That’s been the story of 2019, and we’re finishing with the same theme — weak manufacturing and a resilient consumer.” Powell should reinforce that message.


Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: patti domm
Keywords: news, cnbc, companies, blowout, meeting, means, likely, market, fed, trade, sound, cut, rates, think, interest, report, jobs


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November jobs report proves Fed was right to cut interest rates, former top official says

The strong November jobs report released Friday is evidence that the Federal Reserve has set interest rates correctly, former top Federal Reserve official Donald Kohn told CNBC. The Fed has cut interest rates three times this year, the most recent of which came in October, and lowered its benchmark funds rate by 25 basis points to a range of 1.5% to 1.75%. Fed Chairman Jerome Powell indicated then that the central bank was likely pausing its period of monetary easing. It’s doing great all by its


The strong November jobs report released Friday is evidence that the Federal Reserve has set interest rates correctly, former top Federal Reserve official Donald Kohn told CNBC.
The Fed has cut interest rates three times this year, the most recent of which came in October, and lowered its benchmark funds rate by 25 basis points to a range of 1.5% to 1.75%.
Fed Chairman Jerome Powell indicated then that the central bank was likely pausing its period of monetary easing.
It’s doing great all by its
November jobs report proves Fed was right to cut interest rates, former top official says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: kevin stankiewicz
Keywords: news, cnbc, companies, fed, vice, official, chairman, interest, cut, federal, proves, right, report, rates, economy, reserve, jobs, market, kohn


November jobs report proves Fed was right to cut interest rates, former top official says

The strong November jobs report released Friday is evidence that the Federal Reserve has set interest rates correctly, former top Federal Reserve official Donald Kohn told CNBC.

“If anything it reinforces their judgment that they’ve got policy in a good place … to support the continued good growth in the economy with very contained inflation,” Kohn, a former vice chairman of the Federal Reserve Board, said Friday on “Closing Bell.”

The Labor Department reported Friday that the U.S. economy added 266,000 jobs last month, significantly eclipsing estimates of 187,000 from economists polled by Dow Jones. The unemployment rate dropped back to 3.5%, equaling a mark earlier this year that was, at the time, the lowest since 1969.

The Fed has cut interest rates three times this year, the most recent of which came in October, and lowered its benchmark funds rate by 25 basis points to a range of 1.5% to 1.75%.

Fed Chairman Jerome Powell indicated then that the central bank was likely pausing its period of monetary easing. Fed officials have generally described the U.S. economy as strong, powered by robust consumer spending, despite external pressures such as the U.S.-China trade war and uncertainty around the United Kingdom’s departure from the European Union.

President Donald Trump, however, has continued to criticize Powell’s handling of interest rates, arguing that the Fed should lower them further to make the U.S. more competitive in a global market where some countries have negative rates.

Trump appointed Powell to lead the Fed, whose Federal Open Market Committee meets next week. It is widely expected to leave rates unchanged.

“They certainly don’t need to ease to help the labor market. It’s doing great all by itself,” said Kohn, who was vice chairman between 2006 and 2010.

Assuming no major economic event, Kohn said he expects the Fed to keep interest rates steady for the next year, arguing that would keep the economy in “decent shape.” If anything, he said, the next adjustment to rates would more likely be raising them by 25 basis points if inflation begins to pick up.

But, Kohn said, “Right now it looks like it’s a ways away.”


Company: cnbc, Activity: cnbc, Date: 2019-12-06  Authors: kevin stankiewicz
Keywords: news, cnbc, companies, fed, vice, official, chairman, interest, cut, federal, proves, right, report, rates, economy, reserve, jobs, market, kohn


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India’s central bank unexpectedly keeps interest rates unchanged and slashes GDP forecast

The Reserve Bank of India (RBI) logo is displayed outside of the bank’s headquarters in Mumbai, India, on Tuesday, Aug. 9, 2011. India’s central bank surprised on Thursday by keeping its interest rates unchanged. Markets had widely expected a sixth rate cut from the Reserve Bank of India amid a notable slowdown in the Indian economy. As things stand, the benchmark repo rate — the rate at which it lends to commercial banks — remains at 5.15%. The central bank reiterated it will maintain its “acco


The Reserve Bank of India (RBI) logo is displayed outside of the bank’s headquarters in Mumbai, India, on Tuesday, Aug. 9, 2011.
India’s central bank surprised on Thursday by keeping its interest rates unchanged.
Markets had widely expected a sixth rate cut from the Reserve Bank of India amid a notable slowdown in the Indian economy.
As things stand, the benchmark repo rate — the rate at which it lends to commercial banks — remains at 5.15%.
The central bank reiterated it will maintain its “acco
India’s central bank unexpectedly keeps interest rates unchanged and slashes GDP forecast Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-05  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, indian, unchanged, indias, interest, policy, rbi, reserve, central, rates, slashes, keeps, gdp, forecast, bank, inflation, remains, unexpectedly, target, india, rate


India's central bank unexpectedly keeps interest rates unchanged and slashes GDP forecast

The Reserve Bank of India (RBI) logo is displayed outside of the bank’s headquarters in Mumbai, India, on Tuesday, Aug. 9, 2011.

India’s central bank surprised on Thursday by keeping its interest rates unchanged.

Markets had widely expected a sixth rate cut from the Reserve Bank of India amid a notable slowdown in the Indian economy.

As things stand, the benchmark repo rate — the rate at which it lends to commercial banks — remains at 5.15%.

The Indian rupee weakened against the dollar, changing hands at 71.63 from an earlier level of 71.43. Indian stocks were mixed after the decision, with the Nifty 50 down 0.21% while the Sensex traded near flat.

In its policy statement, the RBI said the decision to keep the rate unchanged was in line with its objective of achieving its medium-term inflation target of 4%, with an upper and lower limit of 6% and 2%, respectively, while supporting growth.

The central bank reiterated it will maintain its “accommodative” stance as long as it is necessary to revive growth while ensuring that inflation remains within the target. It added that while there is “monetary policy space for future action,” it felt appropriate to pause at the stage in light of the current growth-inflation dynamics.

Economists have questioned the efficacy of the RBI’s aggressive rate cuts this when much of that did not appear to have been transmitted back to the economy, especially in the credit market. Inflation is also ticking up due to rising food prices.


Company: cnbc, Activity: cnbc, Date: 2019-12-05  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, indian, unchanged, indias, interest, policy, rbi, reserve, central, rates, slashes, keeps, gdp, forecast, bank, inflation, remains, unexpectedly, target, india, rate


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Australia retail sales stagnate, exports skid in bleak start to fourth-quarter

People walk past the Myer Christmas window display as they do their shopping on December 20, 2012 in Melbourne, Australia. Australian retailers had it tough in October as skittish consumers chose to hoard any windfall from lower interest rates and tax rebates, likely heralding another quarter of disappointment for the economy. Extending a spate of soft reports, retail sales were flat in October at A$27.6 billion ($18.73 billion) when analysts had looked for a 0.3% gain. The dire result was parti


People walk past the Myer Christmas window display as they do their shopping on December 20, 2012 in Melbourne, Australia.
Australian retailers had it tough in October as skittish consumers chose to hoard any windfall from lower interest rates and tax rebates, likely heralding another quarter of disappointment for the economy.
Extending a spate of soft reports, retail sales were flat in October at A$27.6 billion ($18.73 billion) when analysts had looked for a 0.3% gain.
The dire result was parti
Australia retail sales stagnate, exports skid in bleak start to fourth-quarter Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-05
Keywords: news, cnbc, companies, bleak, spending, rebates, cut, interest, fourthquarter, exports, rates, 2020, billion, rate, start, stagnate, tax, retail, early, australia, sales, skid


Australia retail sales stagnate, exports skid in bleak start to fourth-quarter

People walk past the Myer Christmas window display as they do their shopping on December 20, 2012 in Melbourne, Australia.

Australian retailers had it tough in October as skittish consumers chose to hoard any windfall from lower interest rates and tax rebates, likely heralding another quarter of disappointment for the economy.

Data out on Thursday also showed the country’s trade surplus shrank by a third in October as resource exports came off the boil, a worrying turn for what has been a vital prop to growth.

Extending a spate of soft reports, retail sales were flat in October at A$27.6 billion ($18.73 billion) when analysts had looked for a 0.3% gain. Clothing, home wares and department stores all saw declines in the month.

The sector had already suffered its worst 12-month stretch since the 1991 recession as shoppers struggled with stagnant wages and sky-high debt.

The dire result was particularly telling as the Reserve Bank of Australia (RBA) had cut interest rates to a record low of 0.75% in early October, its third easing since June.

Neither were government giveaways providing much impetus with billions in tax rebates being saved rather than spent.

That is becoming an increasing headache for Prime Minster Scott Morrison given he won re-election in May on a pledge the economy would always be stronger under his guidance.

“The spending ‘strike’ of Q3 looks to have extended into early Q4 with still no evidence of a boost from tax refunds or rate cuts – the combined value of which will be adding around $16.6 billion to household disposable incomes over the year to June 2020,” said Westpac senior economist Matthew Hassan.

Investors are wagering policy makers will have to do a whole lot more to revive spending and futures are fully priced for a rate cut to 0.5% by April <0#YIB:>, with a real chance of a move to 0.25% by late 2020.


Company: cnbc, Activity: cnbc, Date: 2019-12-05
Keywords: news, cnbc, companies, bleak, spending, rebates, cut, interest, fourthquarter, exports, rates, 2020, billion, rate, start, stagnate, tax, retail, early, australia, sales, skid


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Weekly mortgage applications drop 9% as refinances pull back

Mortgage application volume decreased 9.2% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Those applications fell 16% for the week but were 61% higher than a year ago. Annual comparisons in this report and last week’s report are skewed because Thanksgiving fell one week earlier last year. Mortgage applications to purchase a home increased 1% for the week and were 24% lower annually. Mortgage rates started this week higher but fell abruptly Tues


Mortgage application volume decreased 9.2% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
Those applications fell 16% for the week but were 61% higher than a year ago.
Annual comparisons in this report and last week’s report are skewed because Thanksgiving fell one week earlier last year.
Mortgage applications to purchase a home increased 1% for the week and were 24% lower annually.
Mortgage rates started this week higher but fell abruptly Tues
Weekly mortgage applications drop 9% as refinances pull back Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-04  Authors: diana olick, in dianaolick
Keywords: news, cnbc, companies, weekly, mortgage, purchase, trump, rates, trade, refinances, week, higher, fell, thanksgiving, pull, applications, drop


Weekly mortgage applications drop 9% as refinances pull back

The combination of a holiday week and a stagnant mortgage rate environment kept borrowers away from their lenders last week. Mortgage application volume decreased 9.2% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The week’s results also include an adjustment for the Thanksgiving holiday.

Refinance weakness caused the overall drop. Those applications fell 16% for the week but were 61% higher than a year ago. Annual comparisons in this report and last week’s report are skewed because Thanksgiving fell one week earlier last year. The weekly drop was likely due to ennui over interest rates. Borrowers usually respond to big changes in rates, and there was none last week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) remained unchanged at 3.97%, with points increasing to 0.32 from 0.30 (including the origination fee) for loans with a 20% down payment.

“U.S. Treasury rates stayed flat last week, as uncertainty surrounding the U.K. elections offset positive domestic news on consumer spending,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Mortgage applications to purchase a home increased 1% for the week and were 24% lower annually. That annual comparison, again, means nothing due to the difference in the timing of Thanksgiving this year. This is not exactly the busy season for buying, but home shoppers are benefiting from low mortgage rates, and pent-up demand from last spring continues to fuel the fall market.

“The purchase market overall looks healthy as we enter the home stretch of 2019,” Kan said. “The seasonally adjusted purchase index was at its highest level since July, as a combination of wage gains, slower home-price appreciation, and slightly easing inventory conditions [for new construction] continue to support increased activity.”

The refinance share of mortgage activity decreased to 59% of total applications from 62% the previous week. The adjustable-rate mortgage share of activity remained unchanged at 4.8% of total applications.

Mortgage rates started this week higher but fell abruptly Tuesday after President Donald Trump suggested a trade deal with China was no longer imminent.

“In the wee hours of the morning, Trump was quoted as saying it might not make sense to finalize the trade deal until after the November 2020 election. Stock prices and bond yields dropped quickly before leveling off as the domestic session began,” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “Equities futures resumed the selling spree as soon as US traders were firing on all cylinders and bond yields weren’t far behind. Additional Trump comments (that alluded to the risk of European trade wars) kept the good times rolling for rates.”

If rates stay low this week, refinance volume will likely recover and move higher again.


Company: cnbc, Activity: cnbc, Date: 2019-12-04  Authors: diana olick, in dianaolick
Keywords: news, cnbc, companies, weekly, mortgage, purchase, trump, rates, trade, refinances, week, higher, fell, thanksgiving, pull, applications, drop


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India’s central bank is expected to cut rates but that may not be enough to spur growth

The Reserve Bank of India (RBI) logo is displayed outside of the bank’s headquarters in Mumbai, India, on Tuesday, Aug. 9, 2011. India’s central bank is expected to slash rates on Thursday after recent data revealed economic growth slowed to a six-year low, but economists questioned the effectiveness of further rate cuts. The current repo rate is 5.15%. Theoretically, when a central bank cuts lending rates to commercial banks, those lenders would pass on the rate cuts to consumers in the form of


The Reserve Bank of India (RBI) logo is displayed outside of the bank’s headquarters in Mumbai, India, on Tuesday, Aug. 9, 2011.
India’s central bank is expected to slash rates on Thursday after recent data revealed economic growth slowed to a six-year low, but economists questioned the effectiveness of further rate cuts.
The current repo rate is 5.15%.
Theoretically, when a central bank cuts lending rates to commercial banks, those lenders would pass on the rate cuts to consumers in the form of
India’s central bank is expected to cut rates but that may not be enough to spur growth Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-04  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, bank, transmission, rbi, spur, central, rates, banks, india, loans, indias, expected, growth, cut, repo, rate


India's central bank is expected to cut rates but that may not be enough to spur growth

The Reserve Bank of India (RBI) logo is displayed outside of the bank’s headquarters in Mumbai, India, on Tuesday, Aug. 9, 2011.

India’s central bank is expected to slash rates on Thursday after recent data revealed economic growth slowed to a six-year low, but economists questioned the effectiveness of further rate cuts.

The Reserve Bank of India has already slashed its repo rate — or the rate at which it lends to commercial banks — by 135 basis points since January to boost the economy, making it one of the most aggressive central banks at the moment. The current repo rate is 5.15%.

Still, the cumulative rate cut and “ample surplus liquidity in the banking system” resulted in only a 60-basis-point reduction in lending rates for fresh loans and much lower for all outstanding loans, according to Citi analysts Samiran Chakraborty and Baqar M Zaidi.

“This lack of transmission has raised serious questions about the effectiveness of monetary policy transmission in an environment of acute risk aversion and other structural rigidities but it will be difficult for any central bank to admit that,” they wrote in a note this week.

Economists on average predicted the RBI to cut its repo rate by 25 basis points to 4.90% this week and then by another 15 basis points in the second quarter of 2020, Reuters reported.

Theoretically, when a central bank cuts lending rates to commercial banks, those lenders would pass on the rate cuts to consumers in the form of cheaper loans. But, many lenders in India are struggling with large volumes of non-performing assets weighing on their balance sheets. That makes them hesitant to pass on the full benefits of lower cost of borrowing to consumers.

“Policy transmission impeded by credit back-up and liquidity risks in the banking and shadow banking sectors question the efficacy of further rate cuts, which come at an increasing cost to rupee and macro stability,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, wrote in a Monday note.

That said, the RBI in September made it mandatory for banks to link certain categories of loans to an external benchmark system to determine interest rates for consumers. Banks that use the RBI’s repo rate as the benchmark would then have to adjust their lending rates according to the central bank’s subsequent moves.


Company: cnbc, Activity: cnbc, Date: 2019-12-04  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, bank, transmission, rbi, spur, central, rates, banks, india, loans, indias, expected, growth, cut, repo, rate


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Growth concerns likely to outweigh inflation worries for India’s central bank, state lender says

A need to push for growth will likely outweigh inflation considerations for the Reserve Bank of India before its policy decision on Thursday, according to the chairman of the country’s largest state lender. The current repo rate is 5.15%. But, those rate cuts have not fully been transmitted back to the economy, which has led many experts to question the effectiveness of the RBI’s monetary policy. Theoretically, when a central bank cuts lending rates to commercial banks, those lenders would pass


A need to push for growth will likely outweigh inflation considerations for the Reserve Bank of India before its policy decision on Thursday, according to the chairman of the country’s largest state lender.
The current repo rate is 5.15%.
But, those rate cuts have not fully been transmitted back to the economy, which has led many experts to question the effectiveness of the RBI’s monetary policy.
Theoretically, when a central bank cuts lending rates to commercial banks, those lenders would pass
Growth concerns likely to outweigh inflation worries for India’s central bank, state lender says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-04  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, outweigh, kumar, banks, likely, concerns, growth, central, cuts, inflation, state, rates, rate, loans, repo, india, bank, worries, lender, indias


Growth concerns likely to outweigh inflation worries for India's central bank, state lender says

A need to push for growth will likely outweigh inflation considerations for the Reserve Bank of India before its policy decision on Thursday, according to the chairman of the country’s largest state lender.

The RBI is due to announce its monetary policy decision on Dec. 5 at 11:45 a.m. local time (2:15 p.m. HK/SIN) and the central bank is widely expected to cut rates for the sixth consecutive time.

“There are two aspects: One is that the inflation numbers have been around 5%,” Rajnish Kumar, chairman of the State Bank of India, told CNBC’s “Street Signs” on Wednesday.

India’s annual retail inflation rose to 4.62% in October on the back of higher food prices, Reuters reported.

“And, the other is, of course, the growth numbers have not been satisfactory and there is a need to push the growth. That will, in my view, outweigh the consideration and in all likelihood, there may be a rate cut tomorrow,” Kumar said.

RBI has already slashed its repo rate — or the rate at which it lends to commercial banks — by 135 basis points since January to boost the economy, making it one of the most aggressive central banks at the moment. The current repo rate is 5.15%.

But, those rate cuts have not fully been transmitted back to the economy, which has led many experts to question the effectiveness of the RBI’s monetary policy.

Theoretically, when a central bank cuts lending rates to commercial banks, those lenders would pass on the rate cuts to consumers in the form of cheaper loans. But, many lenders in India are struggling with large volumes of non-performing assets weighing on their balance sheets. That makes them hesitant to pass on the full benefits of a lower cost of borrowing to consumers.

In September, the central bank made it mandatory for banks to link certain categories of loans to an external benchmark system to determine interest rates for consumers.

“All the retail loans now, as per the regulatory guidelines, they all have been linked to what we call external benchmark lending rate,” Kumar said. “Most of the banks have adopted repo rate as the external benchmark.”

That implies if the repo rate is slashed, those banks would have to lower the interest rates they charge consumers for borrowing. Kumar explained that corporate loans are linked to the marginal cost of lending rate, which is the minimum rate of interest banks can charge businesses to lend them money and depends on the cost of deposits. As it is a derived value based on certain calculations, Kumar said there is a possibility that rate may also come down.

“Both retail as well as corporate, we can expect that as a result of tomorrow’s announcement, there will be rate cuts by the lenders,” he said. India is likely to see a pick up in credit growth in the second half of the fiscal year that ends in March 2020 as loan sanctions and disbursements pick up, according to Kumar.

Overall, the right mix of monetary and fiscal policy as well as addressing sector-specific issues could help to create a sustainable growth environment, he added.


Company: cnbc, Activity: cnbc, Date: 2019-12-04  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, outweigh, kumar, banks, likely, concerns, growth, central, cuts, inflation, state, rates, rate, loans, repo, india, bank, worries, lender, indias


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Goldman Sachs says India’s growth will pick up ‘somewhat’ in 2020

Economic growth in India has slowed down significantly this year — but the third-largest economy in Asia should stage a rebound in 2020 as global conditions are set to improve, according to Goldman Sachs. “As we go into 2020, we think there’s a tentative sense of stabilization in the Indian economy,” Hatzius told CNBC’s “Street Signs Asia” on Tuesday. Goldman Sachs, in a report last week, projected India’s growth to fall to 5.1% this year from roughly 7% annually in 2017 and 2018. An improving g


Economic growth in India has slowed down significantly this year — but the third-largest economy in Asia should stage a rebound in 2020 as global conditions are set to improve, according to Goldman Sachs.
“As we go into 2020, we think there’s a tentative sense of stabilization in the Indian economy,” Hatzius told CNBC’s “Street Signs Asia” on Tuesday.
Goldman Sachs, in a report last week, projected India’s growth to fall to 5.1% this year from roughly 7% annually in 2017 and 2018.
An improving g
Goldman Sachs says India’s growth will pick up ‘somewhat’ in 2020 Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-03  Authors: yen nee lee
Keywords: news, cnbc, companies, india, 2020, rates, economy, global, rebound, growth, sachs, goldman, somewhat, pick, bank, indias, think, hatzius


Goldman Sachs says India's growth will pick up 'somewhat' in 2020

The largest national flag at Rajiv Chowk on March 7, 2014 in New Delhi, India.

Economic growth in India has slowed down significantly this year — but the third-largest economy in Asia should stage a rebound in 2020 as global conditions are set to improve, according to Goldman Sachs.

That said, the extent of the recovery will likely be modest instead of returning India to the growth rates seen a few years back, said Jan Hatzius, the investment bank’s chief economist and head of global economics and markets research.

“As we go into 2020, we think there’s a tentative sense of stabilization in the Indian economy,” Hatzius told CNBC’s “Street Signs Asia” on Tuesday.

India on Friday said its economy grew by 4.5% in the three months to September from the same period a year ago — the slowest growth rate in six years. Goldman Sachs, in a report last week, projected India’s growth to fall to 5.1% this year from roughly 7% annually in 2017 and 2018.

The bank forecast the country’s growth to pick up to 6.4% next year, according to the report.

An improving global economy and domestic policies such as corporate tax cuts should help to lift economic activity in India, said Hatzius. He added that some economic indicators in the country, such as the manufacturing Purchasing Managers’ Index, have improved.

In addition, the country’s central bank, the Reserve Bank of India, “probably isn’t quite done” with easing monetary policy yet — which is also likely beneficial to growth, he said.

“We’ll see how strong the rebound is. We did see a significant deceleration, will it be able to make that up in 2020 and 2021 to get back to the growth rates that we saw a couple years ago?” asked Hatzius.

“That may be a tall order, but incrementally we do think that growth probably picks up somewhat from here,” he said.


Company: cnbc, Activity: cnbc, Date: 2019-12-03  Authors: yen nee lee
Keywords: news, cnbc, companies, india, 2020, rates, economy, global, rebound, growth, sachs, goldman, somewhat, pick, bank, indias, think, hatzius


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In 2019, almost every investment worked

The S&P 500 is up more than 25% and counting. Treasurys, which tend to fall when risk assets rally, also gained in 2019. For stock investors specifically, it was hard to guess wrong. A look at the S&P 500 companies’ internal performance shows only 64 names, or 12%, are down this year. All 11 S&P 500 sectors are ending the year with positive returns.


The S&P 500 is up more than 25% and counting.
Treasurys, which tend to fall when risk assets rally, also gained in 2019.
For stock investors specifically, it was hard to guess wrong.
A look at the S&P 500 companies’ internal performance shows only 64 names, or 12%, are down this year.
All 11 S&P 500 sectors are ending the year with positive returns.
In 2019, almost every investment worked Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-02  Authors: yun li
Keywords: news, cnbc, companies, sectors, investment, 500, rates, investors, 2019, stock, sheet, markets, corporate, worked, returns


In 2019, almost every investment worked

Traders work on the floor of the New York Stock Exchange Lucas Jackson | Reuters

This year is shaping up to be one of the best ever for investors of all stripes with nearly every single asset class on track to finish 2019 in the green. From stocks to government debt to corporate bonds to commodities, no matter where you went, you reaped a profit this year. The S&P 500 is up more than 25% and counting. Treasurys, which tend to fall when risk assets rally, also gained in 2019. Oil, gold and corporate bonds all scored double-digit returns. For stock investors specifically, it was hard to guess wrong. A look at the S&P 500 companies’ internal performance shows only 64 names, or 12%, are down this year. All 11 S&P 500 sectors are ending the year with positive returns. Tech is the biggest winner this year with a 41.5% gain. Communication services, industrials, financials, real estate, consumer sectors all skyrocketed more than 20% this year.

‘Buy everything’

It might seem a little too good to be true as the markets have been grappling with a handful of risks that are almost unprecedented — a costly trade war with China and a bid to impeach the president. But thanks to the Federal Reserve for coming to the rescue. The central bank pulled a 180, cutting rates three straight times this year. The Fed has also been pumping billions into the financial system after the mid-September tumult in very short-term lending markets. “We’ve gotten three rate cuts as we know and a dramatic rise in the size of their balance sheet in a very short period of time,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. The markets “see an expansion of the Fed’s balance sheet to the extent it’s grown and the only response is, it’s QE. Buy everything.” The stimulus has lowered interest rates, pushing all assets up at the same time.

Will the markets hold up?


Company: cnbc, Activity: cnbc, Date: 2019-12-02  Authors: yun li
Keywords: news, cnbc, companies, sectors, investment, 500, rates, investors, 2019, stock, sheet, markets, corporate, worked, returns


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