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India’s Inflation Fight Pays Early Dividend

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India's inflation rate declined to 4.4% in Nov. 2014 and 5% in Dec. 2014. Price pressures are moderating throughout the economy. With lower oil prices in 2015 and long term trend for lower prices the outlook has improved for controlling inflation. The central bank governor Rajan cut rates by one quarter of a percentage point in Jan. 2015 and indicated further rate cuts are ahead to boost economic growth. The financial markets reflect a 1% decline in interest rates and the stock markets were up 2% in Jan. 2015

Inflation in India : 2009-2014

05/13/2010

The poor monsoon in 2009 was a major factor in the rise of prices paid by consumer and farm workers, which saw arise of 14% annually by mid 2010, and were the highest of 17 countries in the Asia-Pacific region in Bloomberg tracking. The Reserve Bank of India (RBI), India's central bank, is making efforts to control inflation with interest rate increases.

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http://www.hindustantimes.com/ 12/12/2017

Food prices in India.

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Inflation and the supply shock for food prices in India. The efforts of the RBI, India's central bank, to control inflation with a series of interest rate increases.

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Keith Bradsher's NYT interview with Raghuram Rajan, Governor of the Reserve Bank of India, Jan. 14, 2015

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Rajan says he works well with prime minister Modi's economic policymaking team, including Arun Jaitley, the finance minister, and economic advisors to the Indian government. With the drop in oil prices there was pressure from the business sector and the small business support base of the new government for a reduction in interest rates. Rajan says he held off on reducing rates at the Dec. 2, 2014 meeting because it was not clear at the time whether the oil prices would remain low for an extended period. Since then inventory data and OPEC policymakers guidance show the prices are likely to remain low for an extended period. On Jan. 14, 2014, Rajan lowered rates by one quarter of a percentage point. In the Indian setup the Governor of the central bank makes decisions compared to the Federal Open Market Committee making decisions at the U.S. Federal Reserve.

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