Gap between the CPI and WPI shows how the government has kept the retail prices up (oil mainly) despite a big drop in global prices. Since the CPI is in line with the Repo rates, and with the knowledge that the savings/deposits are at a 50 year low, I wonder how much scope does the RBI have in reducing the rates further. Lower interest rates will further bring down the savings, and will hurt the senior citizens most. While the highly profit making companies have the ability to bear 50bps extra interest payment, a very big number of small depositors do not have the strength to bear such reduction in their monthly interest income. I dont understand how this government (and its crony capitalist finance minister) can put so much pressure on the RBI to reduce rates, when it itself does not attempt to bring down the CP Inflation?
2 replies on “Chart:India Inflation is benign”
Gap between the CPI and WPI shows how the government has kept the retail prices up (oil mainly) despite a big drop in global prices. Since the CPI is in line with the Repo rates, and with the knowledge that the savings/deposits are at a 50 year low, I wonder how much scope does the RBI have in reducing the rates further. Lower interest rates will further bring down the savings, and will hurt the senior citizens most. While the highly profit making companies have the ability to bear 50bps extra interest payment, a very big number of small depositors do not have the strength to bear such reduction in their monthly interest income. I dont understand how this government (and its crony capitalist finance minister) can put so much pressure on the RBI to reduce rates, when it itself does not attempt to bring down the CP Inflation?
Good question.