Reserve Bank of India Governor Raghuram Rajan is set to use consumer-price inflation as the main guide for monetary policy for the first time, a shift that signals further increases in the benchmark interest rate.
Indian central bank chief Raghuram Rajan’s surprise move to raise the policy interest rate adds pressure on Prime Minister Manmohan Singh to take politically challenging steps to boost economic growth as elections near.
India’s weakest economic growth since 2009 escalates pressure on the government to increase the smallest foreign-exchange reserves among BRIC nations, as policy makers struggle to contain a sliding rupee.
India’s rupee rose 6.1 percent in the past four days, the biggest gain since at least 1973, as U.S. jobs data that fell short of estimates tempered concern the Federal Reserve will cut stimulus this month.
India’s rupee fell for the second day on concern capital outflows will rise as the U.S. prepares to pare stimulus, increasing the currency’s vulnerability to the current-account deficit and a weak external debt position.
India’s rupee fell, rebounding from a one-week high, as local policy makers’ steps to steady the currency were countered by concern a potential paring of U.S. stimulus will spur outflows. Bonds declined.