oppn parties Surprise Off-Cycle Rate Hike By RBI

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  • Allahabad HC said that the UP Police is acting as law unto themselves as they detained a person unlawfully even before his arrest
  • Kolkata witnesses traffic snarls on the first day of the Durga Puja festival as revellers start pnadal-hopping
  • Neha Bora was subsequently released and Dipke is to appear before a magistrate today at noon
  • Delhi Police detained Cockroach Janta Party founder Abhijeet Dipke, Neha Bora of AISA, student leaders and supporters ahead of a rally in Connaught Place demanding Chief Election Commissioner Gyanesh Kumar's resignation. The protest followed the detention and jailing of two CJP leaders earlier in the week over demonstrations at Jantar Mantar
  • The Reserve Bank of India is considering further monetary tightening to counter capital outflows and increase the cost of betting against the rupee, according to bankers and analysts cited by Reuters. The measures follow recent rate increases and steps to drain liquidity as pressure on the currency and inflation concerns persist
  • India directed oil marketing companies to stop diverting sugar-based feedstocks for ethanol production in the 2026–27 supply year, according to a new tender issued on Friday. The companies have invited bids for 11 billion litres of ethanol made from alternatives including corn and broken rice, amid concerns about domestic sugar supplies and prices
  • Finance Minister Nirmala Sitharaman said India's trade imbalance with China was growing sharply and attributed the problem partly to restrictions on Indian goods and services entering the Chinese market. China subsequently said it was ready to work with India to address mutual economic and trade concerns; India's trade deficit with China reached $69 billion in the first half of FY2026–27, up 27% year-on-year
  • Indian equity benchmarks extended their recovery on Friday, with the Sensex rising 413.66 points to close at 74,729.27 and the Nifty 50 gaining 148.80 points to settle at 23,146.15. Information technology shares, including Tech Mahindra, Infosys and TCS, helped lift the indices
  • India defeated Zimbabwe by four wickets in the opening women's T20 International in Raipur, taking a 1–0 lead in the three-match series. Deepti Sharma and Niki Prasad combined in an 82-run stand after India's top order collapsed, helping the hosts chase down Zimbabwe's total of 114 for five
  • Indian wrestler Komal won bronze in the women's 59 kg category at the Under-23 World Wrestling Championships in Las Vegas, defeating Kazakhstan's Viktoriia Khusainova 7–2. Fellow Indian Amruta Pujari advanced to the women's 72 kg final after recording two pinfall victories
  • Indian shuttler Jagsher Singh Khangurra secured a bronze medal at the BWF World Junior Badminton Championships in Cairo
  • The Supreme Court of India upheld the Bombay High Court's decision quashing the 2020 write-off of ₹8,415 crore in additional tier-1 bonds issued by Yes Bank (Yes Bank). The court ruled that the bank's administrator lacked the authority to extinguish the bonds under the final reconstruction scheme, strengthening bondholders' claims
  • The Supreme Court issued notices to the Election Commission of India, Delhi Police and opposition leaders, including Rahul Gandhi and Akhilesh Yadav, in separate petitions concerning electoral-roll revision and protests held in Delhi on October 10–12. The court also directed the preservation of CCTV footage linked to allegations of police excesses
  • The Supreme Court ruled that a person converting from Hinduism to Islam cannot automatically claim backward-class reservation benefits in the new religious community solely on the basis of their previous caste status. The judgment upheld the Madras High Court's decision striking down a 2024 Tamil Nadu government order that permitted such certification for specified communities
  • The Election Commission of India ordered a Special Summary Revision of electoral rolls in 14 states and three Union Territories, using January 1, 2027, as the qualifying date for voter eligibility. The draft rolls are scheduled for publication on November 12, claims and objections will be accepted until December 11, and the final rolls are due on January 4, 2027
Delhi HC refuses to ban CJP's Tiranga rally at Central Park in Connaught Place today /////// Police says will control and regulate it /////// NDMC closes the park for the public on Friday and Saturday
oppn parties
Surprise Off-Cycle Rate Hike By RBI

By Our Editorial Team
First publised on 2022-05-05 02:50:34

About the Author

Sunil Garodia The India Commentary view

Less than a month after the regular MPC meeting decided to hold rates and bat for growth while keeping an eye on inflation, the RBI changed course on Wednesday and increased the repo rate by 40 basis points while raising the CRR (cash reserve ratio or the amount of money banks are to park with the RBI) by half a percentage point in an unexpected move in an off-cycle meeting. The combined effect of these two measures will be to suck out Rs 87000cr of the money floating in the economy and make loans costlier. The bank said it was forced to intervene since inflation was already and the geopolitical situation showed that supply constraints were unlikely to become normal in a hurry leading to uncertainty over inflationary trends. Thus, the apex bank has, while maintaining the accommodative stance, chosen to prioritize inflation over growth more forcefully and indicated that tight money policy is likely to rule after four years of easy money policy.

RBI governor Shaktikanta Das had said after the last meeting that "in the sequence of priorities we have now put inflation before growth. Stance continues to be accommodative and with an eye on withdrawal of accommodation." With the bank's forecast about inflation going horrendously wrong for the last several announcements and with Central banks the world over tightening monetary policy to combat inflation, it was obvious that the RBI would also do the same. But the off-cycle move took financial markets by surprise and the stock markets crashed after the announcement.

Further, the current inflation the world over is cost-push inflation that is being fueled by supply side constraints and rising prices of fuel and commodities. It is not a demand-pull inflation that can be tamed by only reducing money supply or raising interest rates. Although macro-financial stability can be achieved by adjusting rates or sucking out extra money floating in the economy, since consumer demand in India is stagnant, these measures alone are unlikely to help in taming inflation. In fact, if economic sentiments sour due to higher rates, this could even lead to slowdown in growth, which is the last thing India wants as the economy is showing signs of recovery.

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