Highlights of the Week (Dec 19 – Dec 23) and Impact Analysis
| Ø MPC minutes released for the Dec RBI meet had consensus on status quo |
Ø There was consensus across the 6 members of the MPC over maintaining the repo rate at current levels of 6.25% Ø Upside inflation risks, uncertain impact of demonetization and hawkish stance of the US Fed prompted this move
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| Ø Richmond Fed President Jeff Lacker has hinted at 3 Fed rate hikes in 2017 |
Ø US Fed rates are likely to end at 2% by the end of 2017 and closer to 2.5% by end of 2018 Ø The original indication was of 2 rate hikes and this makes the Fed policy more hawkish with a sharper trajectory
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| Ø FPIs pull out over $9 billion in the months of November & December |
Ø Demonetization risk in India and the Fed hawkishness was responsible for the FPIs turning negative on EMs. Ø Within the Emerging Markets (EM), India has accounted for nearly 50% of the total FPI outflows
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| Ø Cyrus Mistry has resigned from the boards of key Tata Companies |
Ø With odds loaded against him, Mistry has quit the board of all Tata companies where EGMs were to be held to oust him Ø Mistry, however, has moved the National Company Law Tribunal (NCLT) over governance issues at the Tata group
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