India's Central Bank Announced A 50 Basis Point Increase In Interest Rates Of &Nbsp, With A Tightening Rate Exceeding Expectations.

　　 India After the monetary policy conference held in July 26th, the central bank announced that the benchmark interest rate will be raised by 50 basis points to control the inflation pressure of domestic inflation. This is the eleventh increase in interest rates since March last year, and the rate hike is 25 basis points that are widely expected. After the interest rate adjustment, India commercial bank's lending rate to central bank increased from 7.5% to 8%, and the central bank's reverse repo rate from commercial banks to liquidity will be adjusted from 6.5% to 7%.

Analysts said that in the first half of this year, rising The economy entered the "double high" period of inflation and benchmark interest rates. The Central Bank of Brazil has announced interest rates raising at the 5 interest conference this year. The Central Bank of Korea has raised interest rates for the 3 time this year, with a cumulative rate of 0.75%. The Central Bank of Thailand has also raised interest rates by 1.25%. The market is expected to see that inflation in most emerging economies is expected to peak in the year as the tightening policy becomes more apparent.

India "pre emptive" inflation control

The statement issued by the India central bank on 26 shows that the monetary policy decision is based on the following two considerations:

First, the needs of India. pressure Still strong. At present, the inflation situation in India is more severe than that expected by the bank in May. Especially the inflation rate of non food manufactured goods is significantly higher than the 4% average increase in the past 6 years. In addition, the fluctuation of international crude oil (99.13, -0.46, -0.46%) is still a larger external risk factor. Data show that India's June inflation rate index of wholesale price index (WPI) grew 9.44%, an increase of 9.04% over May, and WPI has never been lower than 9% this year.

Second, India's economic growth has shown signs of easing, especially in some sectors of interest rate sensitivity. However, there is still no evidence that the country will face large output decline in many sectors. India's import and export, tax revenue, corporate income and profitability, and bank credit demand have cooled, but not sharply.

The statement stressed that although the effect of the austerity policy adopted by the bank is still in the process of transmission, taking into account the overall upward trend in domestic inflation, the bank decided to take a preemptive stance on the price situation. In response, analysts at DBS Bank of Singapore believe that the India central bank's statement indicates that the bank will also adopt more monetary tightening policies to deal with the inflation situation. It is expected that the Central Bank of India will raise interest rates by 50 basis points by the end of this year.

It also raised the annual inflation rate in India from 6% in early May to 7% this year. The Central Bank of India says inflation in the country will remain in the upper channel for the next few months until the end of the year.

　 Emerging economies with high inflation should wait for "fever"

On the way to raise interest rates, India is not alone.

In July, the Central Bank of Brazil announced in the major emerging economies. Raise The interest rate is 25 basis points to 12.50%, and the Central Bank of Thailand has raised 25 basis points to 3.25%. In addition, the ROK this year has joined the Korean government to form a working group to control inflation as the main purpose of raising interest rates three times this year. South Korean President Lee Myung-bak also asked the group to study ways to deal with rising prices, saying that stabilizing prices and creating jobs are the government's first policy tasks. In short, most emerging economies have adopted monetary and fiscal tightening policies to curb rising prices and are determined to bring home inflation to the top this year.

In this regard, Citigroup's global equity investment strategy team said: "we think that the inflation rate of emerging economies will come down before the end of this year, because the global economy is expected to be weak, commodity prices are relatively stable, and monetary tightening policy will also play its due role."

However, the path of inflation control in emerging economies is doomed to be unfair because countries face the dual challenges of internal economic growth and high external energy prices. India and Brazil, which have sufficient liquidity, rapid credit growth and rapid growth of residents' incomes and consumption, are typical cases. In addition, the tension of global food supply is a common problem faced by all emerging economies, especially in Asia's emerging economies.

According to the statistics of Holland Cooperation Bank, food accounts for about 30% of the CPI weight of Asian countries, and India and Philippines account for 45% of the total, which is significantly higher than 15% of Europe and 10% of the United States. Over the past year, the price of International Rice in the Chicago Mercantile Exchange has risen by 70%. The food and Agriculture Organization of the United Nations released a report in July that the price index of food products made up of 55 kinds of grain commodities climbed to 234 points in June, up 39% from the same period last year, only a step away from the historical high of 238 in February. This means that emerging economies control. inflation The road will be full of thorns.