INDIA IS A RUPEE 400 TRILLION ECONOMY WE NEED TO MAKE REAL WAGES/INCOMES/RETURNS AND DEMAND UP AND INCREASE SUPPLI(E)Y AND LOWER PRICES... INDIAN RUPEE COULD BE DISTRiUBUTED TO MORE COUNTRIES IT DIVIDED BY MORE NUMBERS AND MORE INVESTORS... 85:1 RUPEE:DOLLAR.....
Inflation Rate in India is expected to be 6.30 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the India Inflation Rate is projected to trend around 4.10 percent in 2024 and 4.30 percent in 2025, according to our econometric models.
https://tradingeconomics.com/india/inflation-cpi
4% is the point we want to be... Little inflation expectations are conducive to income and demand and growth expectations, all prices move in the same direction even bond prices, except bond yields... Nonetheless, higher real income expectations are also likely to reinforce demand/supply and growth...
Hedging the risk is a quite significant step to foster financial stability... bond prices and bond yields move in opposite direction... The K-Percent Rule was a proposal by economist Milton Friedman that the central bank should increase the money supply by a constant percentage every year. The K-Percent Rule proposes to set the money supply growth at a rate equal to the growth of gross domestic product (GDP) each year.
Both appreciation and depreciation are fine as long as they attest to expectations... what people expect happens is good for investments...
Both rate hikes and rate cuts are good for investment if people gauge/expect them right so that they are surgical and preemptive... Expectations are self-reinforcing, if everybody expects that supply would go down/demand would go up they would increase investment demand which actually pushes prices up and if they expect supply would go up/demand would go down they would lower investment demand and help prices go down...
There is no chance of rate hikes now in the near future because stable policy rates could stabilize the economy as far as inflation and growth are concerned because supply could increase due to lower price expectations...
If the current growth rate is 4.4% and the IMF is expecting INDIA to grow 5.9%, it means in the next period growth would increase( 4.4, 5.9= 10.3% ) if the base year is the same... We are calculating rate of increase in growth, growth rate Vs growth rate every year, and not real growth or GDP (constant prices)[ increase in demand/supply- inflation... How much demand and supply or production/quantity has increased without creating volatility in prices.
RBI may peg the market real rate of interest to inflation which would be a lot more convenient and could help to be surgical... and help form expectations... It is the price of capital, that decides every other price, the supply side... or the other demand side labour and real wages... The government may decide real goods and service wages and monetary equivalent to subsistence wages which shall not be cut down... But real wages are cut in the real WORLD through inflation... see that conSp.. . …
Trade is only profitable when two countries have equal terms of trade... If there is a big gap in the currency value a strong currency country could lose in exports but gain in imports, therefore, imports are good when the other country's currency is cheap, and goods and services too ie when a strong currency country is importing from a relatively weak country-currency... The opposite is that if a strong country currency is exporting to a weak currency country it could not export much because higher prices could restrict demand... Trading is good when terms of trade equalize... Similarly, if weak country is importing from a strong currency it could backfire though if it is exporting to a strong country currency area it could earn healthy and reduce CAD... Import from cheap and export to dear... Use of dollar add much uncertainty to price stability and demand across the GLOBE...
5 minutes ago
No comments:
Post a Comment