Do it yourself

In a rare instance of exuberance, the RBI governor termed the present moment as “rare Goldilocks period” of the Indian company, after cutting the policy rates by 25bps and quietly opening the liquidity taps. This should have enthused the financial markets but to the contrary, markets have turned even more cautious; especially, the foreign investors. This market behavior phenomenon might raise several questions in the minds of small investors. For example, - ·           Whether the rate cut decision is driven by conventional macroeconomic and monetary policy conditions, i.e., to support growth, considering that growth rate is already high and above the RBI estimates or the decision is driven by non-monetary policy considerations, e.g., driving bond yields down in anticipation of larger borrowing targets in FY27, or to drive INR further lower to help exporters manage tariff situation well, etc.? ·        ...

  In a recent research report, Goldman Sachs estimated that “energy bills will peak early next year at c.€500/month for a typical European family, implying a c.200% increase vs. 2021. For Europe as a whole, this implies a c.€2 tn surge in bills, or c.15% of GDP.” The bank believes that repercussions of this “will be even deeper than the 1970s oil crisis.” Obviously, a problem of the magnitude would require an impactful policy intervention that could have wider and deeper implications for decades to come. The policy interventions could involve partial suspension of free market mechanism; rationing of energy consumption; fiscal subsidies; deferment of climate goals and increased use of coal and/or accelerated shift to renewable sources of energy etc. Besides, there could be serious geopolitical implications also. In another interesting paper, McKinsey & Co, outlines how inflation may be flipping the global economic script. In the paper McKinsey’s experts have examined many of...