Playing games.

"The Reserve Bank (RBI)...expectedly raised the benchmark lending rate by 35 basis points (bps) - the fifth increase since May" while it "lowered its estimate of GDP growth to 6.8 percent in the fiscal ending March 31, 2023, from an earlier forecast of 7 percent." DH. "It, however, kept the inflation forecast unchanged at 6.7 percent for the current fiscal and projected it to come down below the upper tolerance limit of 6 percent in the fourth quarter of the current financial year." While other central banks raise rates in multiples of 25 bps, the RBI likes to keep us entertained with unusual numbers. On 4 May, it raised its repo rate by 40 basis points in an emergency meeting of the Monetary Policy Committee. BS. The emergency was an anticipated 75 bps rate hike by the US Federal Funds rate later on the same day. WEF. If it was an emergency why not raise the rate by 50 bps? The Goods and Services Tax (GST) collection in April was a record Rs 1,67,540 crore (Rs 1,68 trillion). HT. Since GST is a percentage of the price, the higher the inflation the higher the collection. The next meeting of the Fed is on 13-14 December 2022. Federal Reserve. The Fed is expected to downshift to a 50 bps rise at this meeting, Reuters, but economists say "a longer period of US central bank tightening and a higher policy rate peak are the greatest risks to the current outlook." "Peak rate forecasts ranged between 4.25%-4.5% and 5.75%-6%." As expected, businesses in India were unhappy because this will increase borrowing costs and suppress demand, FE, implying thereby, a fall in investments. Will investments in manufacturing increase if interest rates fall? "India's overall manufacturing growth as a percentage of GDP remained steady over 60 years," wrote Prof Deepanshu Mohan. In fact, it has fallen from 17.9% of GDP in 1995 to 13.7% of GDP in 2020. "At a macro-manufacturing level, India experienced 'premature de-industrialization'." "The International Monetary Fund (IMF) has cautioned against dropping the guard against inflation" and warned that "easing monetary policy too early should be avoided and has called for continuing fight against sharp increase in prices." TOI. "Consumer confidence among Indian households continued to improve in November even though it remained in the pessimistic zone, the RBI said in its consumer confidence survey." If demand increases while supply remains constrained due to geopolitical reasons won't that increase prices still further? Perhaps, the RBI is banking on base effect. If the price of a thing rises from Rs 100 to Rs 200, the price has increased by 100%. If the price jumps from Rs 200 to Rs 300 it has risen just 50%, even though the increase was the same. The RBI may claim victory but the poor suffer enormously nonetheless. So, why do businesses continually whine for lower rates? "The RBI has disclosed that Rs 10 lakh crore (Rs 10 trillion) in bad loans have been written off in the last five years." The Wire. Playing games with interest rates. What if the Fed refuses to play along?