Economic Research Desk

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Morning Market Starter

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24th Sep 2021  –   10:00 am

Weekly borrowing and liquidity monitor

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20th Sep 2021  –   11:00 am

CPI September 2021:lower food prices led to softer inflation

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14th Sep 2021  –   09:00 am

GDP Review Q1 FY2022

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01st Sep 2021  –   08:00 am

Jackson Hole Response August 2021

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30th Aug 2021  –   02:36 pm

Given the lockdowns that were imposed in August and sharp fall in PMI surveys, what do you expect China GDP growth for 2021 to be?

Thank you for your input!


i360 Indices

UFI 05-Sep-21

09th Sep 2021  –   12:00 pm

iD80 Index May-21

01st Jul 2021  –   00:00 am

i4Markets Index Apr-21

07th May 2021  –   10:36 am

Reserve Bank of India

In its policy meeting in August, the Monetary Policy Committee (MPC) voted unanimously to maintain status quo on policy rates and keep its state based accommodative stance in place. In line with our expectations, the RBI has increased the size of the VRRR. However, the RBI governor has underscored that the higher VRRR auctions should not be misread as a reversal of the central bank’s accommodative monetary policy stance or a tightening measure.

Overall, the policy had a lesser dovish underpinning than the previous one in June. Going forward, we expect the RBI to keep the repo rate unchanged over FY2022. However, we maintain our projections of a normalization in the Liquidity Adjustment Facility (LAF) corridor with a two-step hike in the reverse repo rate starting possibly around December 2021.

Additionally, the RBI/MPC can be expected to continue using unconventional policy tools, such as GSAPs and OTs to avoid any untoward surge in yields. Given the need to continue to keep yield movements compatible with the monetary policy stance, we see scope for GSAP 3.0 program to get announced in the October policy meeting.

Federal Reserve

In the latest policy meeting in July, the Federal Reserve Open Market Committee (FOMC) maintained status quo on expected lines. Guidance was changed to indicate that tapering was discussed in the meeting. However, an imminent move towards tapering was ruled out as the FOMC wants to see more progress towards meeting its economic objectives.

In the September policy meeting, we think an announcement on tapering could be made, if economic indicators show continued traction. However, we think that a formal announcement could be a close call.

We think that the FOMC will signal that it is ready to taper around Aug-Sep, and commence such an action in Nov, 2021. We see a rate hiking cycle beginning in 2023, but acknowledge that it could come earlier than expected.

Bank Of England

In its policy meeting in June, the BoE maintained status quo and indicated that it will not tighten the policy, until there is sufficient evidence of an erosion in spare capacity.

In its upcoming policy meeting in Aug, we expect the BoE to maintain status quo and express some concerns about the rise in infection rates. A minor tapering in the weekly asset purchases programme is also possible.

We think that the BoE will move towards ending its QE purchases programme by the end of 2021. However, we expect it to keep the size of its balance sheet unchanged, and not tighten policy anytime over 2021-22.

European Central Bank

In the last policy meeting in July, the ECB maintained status quo. However, it also re-worded its forward guidance to indicate that it is targeting a 'symmetrical 2% inflation target. The forward guidance suggests that the policy will remain accommodative for a considerable period of time.

For the Sep policy meeting, we think that the ECB will maintain status quo along with a continued re-affirmation that the policy will remain accommodative.

The Pandemic Emergency Purchases Program (PEPP) could get wound down by Mar, 2022. However, we think there could be an increase in the size of the open-ended monthly QE programme that could get announced later in 2021, or early in 2022, ensuring that the balance sheet expansion remains in place.

People's Bank of China

As Chinese growth momentum, particularly private consumption and service activity has been softer than expected in 2021, the PBOC delivered a Required Reserve Ratio cut of 50 bps to stimulate demand in July. However, this was a one-off measure and does not imply the beginning of a new easing cycle.

We expect the PBOC to maintain a neutral liquidity regime over 2021 and keep policy rates unchanged.

We expect the PBOC to move to a tightening regime going in to H12022, responding to a pick-up in inflation and improvement in growth. Policy rates might be kept unchanged, but the Central Bank could drain liquidity and raise short-term money market rates.

Over the years we have found ICICI bank Research to be quite insightful and actionable. The statistical and quant based observations in particular are unique and lend interesting perspectives. Forward looking research helps in forming a cross asset view.

TCS Treasury

Tata Consultancy Services

The research reports are very well structured, ideas clear and writing concise and argumentative. The literature review is comprehensive and you manage to successfully discuss the importance of your research, from a theoretical and an applied perspective.

HCL Technologies

Treasury @ HCL Technologies
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