Hunger for luxury.

"The Reserve Bank of India (RBI)-led Monetary Policy Committee (MPC)...retained repo rate, the key lending rate, at 6.5%, announced Governor Shaktikanta Das. The MPC also decided unanimously to change the 'withdrawal of accommodation' stance to 'neutral' to remain unambiguously focused on a durable alignment of inflation with the target." ET. The government asked the RBI "to maintain retail inflation at 4% with a margin of 2% on either side" till March 2026. ET. At its meeting, the RBI maintained its inflation forecast for 2024-25 at 4.5% while projecting a growth rate of 7.2% for the real Gross Domestic Product (GDP). "Nearly two years of elevated food inflation is leaving less in the lunch boxes of impoverished children, as government funded school meals suffer cutbacks because of rising prices of vegetables, fruits and pulses." ET. India has been ranked at 105 out of 127 countries in the Global Hunger Index 2024. "India is among 42 countries that fall within the 'serious' category, alongside Pakistan and Afghanistan." BS. The RBI cannot influence food production and hence cannot bring down food inflation but it is in charge of setting the cost of borrowing which controls consumer behavior. The nominal repo rate was at over 6% till December 2018, since when it fell sharply to 4% by June 2020, while the real repo rate fell from over 4% to minus 2% over the same period. Mr Shaktikanta Das was appointed for three years as the Governor of the RBI on 18 December 2018, which was extended by another three years in December 2021. wikipedia. "A nominal interest rate refers to the total of the real interest rate plus a projected rate of inflation." Investopedia. Thus, a negative real interest rate meant the RBI set its interest rate at below the rate of inflation. A low interest rate is supposed to benefit the economy by encouraging households to spend more on buying homes or on consumer durables like motor vehicles and helps to increase profits of banks which pay less interest to savers while charging relatively higher interest on loans. The cost of very low interest rate is that it transfers wealth from savers, usually retired people dependent on interest income from savings, to borrowers. It also results in asset price inflation as people rush to borrow at low cost to invest in real estate or equities. stlouisfed.org. "With a supply of affordable homes dwindling," "After growing 4.3% last year, national home prices in India are expected to rise 7.75% this year, an upgrade from the 6% predicted in May," and "Home prices are then expected to increase 6.0%-6.25% in the next two years." Reuters. Also, "Sales of super luxury cars in India are set to surpass previous records for the third consecutive year." BS. Not surprising that, "RBI Governor Shaktikanta Das received an A+ rating and was ranked the top central banker globally for the second consecutive year by US-based Global Finance Magazine." ET. Happy Dussehra. May the Universal Mother bless everyone with health, prosperity and peace.