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The Future Of India's Monetary Policy Is Now "Monsoon Dependent"
In a world priced to perfection and beyond, thanks to 7 years of central bank micromanagement of not only the capital markets but the economy, any and every scapegoat will be used when even the smallest deviations from the scripted economic path occur.
Enter "harsh winter weather." However, when said "harsh winter weather" entered two years in a row and highly-paid US economists turned out to be far more clueless about the future than the worst-paid weatherman, things promptly got funny when the BEA announced last week that it will seasonally adjust seasonally-adjusted data, thus officially jumping the econometric shark, and revealing how big a farce all underlying economic measurements of the economy truly are.
As it turns out it is not just a US "thing" to blame the weather.
Enter the Bank of India, which overnight cut its benchmark rate from 7.5% to 7.25%, as had been largely expected, taking India's interest rate to the lowest since September 2013.
The punchline, however, was when RBI's governor Raghuram Rajan gave his outlook for the possibility of future rate cuts, saying he would have to wait to assess monsoon rains before acting again, an outlook that according to Bloomberg disappointed investors looking for more cuts to spur weak economic growth.
While “a conservative strategy would be to wait” for more certainty on how monsoon rains will affect inflation, weak investment means “a more appropriate stance is to front-load a rate cut today and then wait for data that clarify uncertainty,” Rajan said. He also lowered the RBI’s growth forecast and said inflation risks are tilted on the upside.
Consumer prices rose 4.87 percent in April from a year earlier, holding below Rajan’s 6 percent target for an eighth straight month. While price pressures have so far proved immune to crop damage from unseasonal rains, the weather department predicts monsoon rainfall -- which waters more than half of India’s farmland -- will be below average this year.
Well, we already have a Dow data dependent Fed, it is only fitting that we also have a Monsoon-dependent central bank: Rajan said three risks are clouding, no pun intended, the inflation outlook: the possibility of a weak monsoon, rising oil prices and a volatile external environment. Of these, however, the weather got top billing as the biggest swing factor.
Slowly a pattern is emerging: the Fed will never hike rates just before, or during, winter; India will never cut rates just before, or during, a weak monsoon; the ECB will never accelerate QE during summer when everyone goes on vacation (only in the late spring), and so on.
We used to joke that John's Weather Forecasting Stone is a tool no sell-side economist and strategist should live without. But it has now become abundantly clear that when it comes to monetary policy, there is just one tool that every central planner needs more than anything.
The following.
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Monsoon rains must be lovely in Calcutta. All that shit and piss dispersing everywhere.
Just like D.C. a shit swamp...
In India they get rained on. In Soviet America we get pissed on.
I am currently creating a model that incorporates real-time weather conditions, and the worse the weather gets, it predicts better stock market performance, because worse weather means worse economic activity yielding no rate rises, which pushes up stocks. It all makes perfect sense.
Learn to swim.
A hard rain's gonna fall...
Yes, because paying people less % for buying bonds is good for the "economy".
Debt is income, debits are assets, toil is freedom!
Year 2 of the ice age onset. 5 more to go and then 80 years of chaos.
To be fair it's not like they get too many Polar Vortexes. Dang Canadstanis.
There's little Hope! You hear about rape/kidnap victims falling for the perpetrators.
The East India Company (EIC,UK) pirated and plundered India with their private army garrisons responsible for millions of deaths ( including, created famines ).The aristocracy (ruling class) of Britain turning a blind eye to the goings-on , non more so than their Royal Patron QE1. 4oo years on and they're still mentally unable to shake off the chains/shackles.
This is what we're up against, not just the sociopaths but the victims of.
Why Bother? Am very close to throwing in the towel, admitting defeat and turning a blind eye.
Indians are into reincarnation. They don't need a lot of hope. They have infinite oportunities to do it over and over again.
"Enter the Bank of India"
Bank of India is a bank. It is Reserve Bank of India or RBI - India's central bank.
deleted
Now I understand global change deniers, it is financial betting pure and simple. More bad weather lower interest rates, more disasters higher GDP. Banks fired all Ph.Ds and MBAs and hire posh weathermen in fancy suits. What not to like everybody gay on the way to hell.
A rate CUT and Bombay "melts down"...lol.
http://www.bloomberg.com/quote/SENSEX:IND
Hmmmm... The Indians are losing their touch.
They used to predict everything based on Planetary and star positions.
Now they are down to rain and storms.
So the monetary policies are now seasonally adjusted ?