Making Sense

Happy Diwali everyone !!    Additional Meeting of the Monetary Policy Committee for 2022-2023 RBI today slated an additional meeting of the MPC on Nov 3, 2022 u nder the provisions of Section 45ZN of the RBI act. There was a flutter among participants regarding this meeting since it is scheduled immediately after the U.S FOMC Rate decision on Nov 2, 2022.  Provisions  of Section 45ZN of the RBI act pertain to  F ailure to maintain inflation target.-- Where the Bank fails to meet the inflation target, it shall set out in a report to the Central Government-- (a) the reasons for failure to achieve the inflation target; (b) remedial actions proposed to be taken by the Bank; and (c) an estimate of the time-period within which the inflation target shall be achieved pursuant to timely implementation of proposed remedial actions. Regulation 7 of the RBI MPC and MPR Regulation, 2016 pertain to the requirement for RBI to  send the report to the Central Govern...

  The recent announcement by the OPEC+ to cut oil output by 2mb/d is a big one. The announcement reeks of political leanings as the OPEC+ combined  unanimously  decided  to cut output in a meeting that lasted less than 30 min. Clearly President Joe Biden's visit to Saudi Arabia 3 months back did not yield any dividend. Prince Abdulaziz said the real cuts would be 1.0-1.1 mb/d since OPEC+ failed to meet production targets. OPEC+ production fell about 3.6 mb/d short of its output target in August. Analysts are divided on the actual cuts as  J efferies said they estimated the real cuts at 0.9 mb/d while Goldman Sachs put it at 0.4-0.6 mb/d. **Now the question that comes is can the US balance the market through SPR release? SPR capacity is at 714 million barrels (mb) which will fall to 342 mb after the 180 mb release announced on Mar 31, 22 is complete. Can the administration release more? IEA says  SPR must retain the equivalent of 90 days’ worth of the p...

 India recorded BoP surplus of $ 4.5 bn for Q1 22-23. Current account deficit came in at $ 23.90 bn and capital account recorded a surplus of $ 28 bn explained by short term credit of $ 8.7 bn and $ 19 bn in bank capital. 1.        Merchandise     -68.50 As    Monthly trade deficit for first 5 months is usd 129 bn and for the balance of the year estimated deficit is usd 25 bn pm , then yearly number is likely at usd 300 - 305 bn. 2.        Invisibles           44.66 ( Services        31.71;  Transfers     22.85;  Income        -9.26)       The year end number is estimated at usd 160 bn wherein services surplus could average usd 30 bn pm ( usd 120 bn surplus); transfers at usd 80 bn and income outflow at usd 40 bn. I      Current Ac...