U.K.’s flash PMI indices indicate decline in business activity in November, composite index falls to 47.4
Reserve Bank of India likely to stand pat in December
The Indian central bank, Reserve Bank of India, is set to meet later this week. According to a DBS Bank research report, the RBI is likely to pause on rates. Soft growth but accelerating inflation has left policymakers in a fix, while non-rate measures are being tapped to anchor financial conditions.
Inflation has consistently remained beyond the upper end of the 2-6 percent target range every month in 2020, except March, accompanied by sticky core inflation. The views of the MPC regarding liquidity might assume more importance, as a systemic surplus depresses short-term rates.
“Sustained intervention in the FX markets has added to this surfeit (US$93bn jump in reserves), raising concerns at the margin over a) inflationary impact; b) how long the rupee can buck the regional appreciation trend; c) risks of risk mispricing”, added DBS Bank.