Currency wars are a global contagion.
The butterfly effect of Countries desperately attempting to adjust their currencies to offset a global trade downturn – the all important export performance.
Global demand is soft – will continue to get weak over ensuing months.
Charts courtesy of Deutsche Bank. Click on to emblazon.
The Reserve Bank of India released its CPI forecasts for FY17, and suggests a declining path for inflation.
While the CPI forecast for January, 2016 is at 5.8%, only a shade lower than its August projection of 6%, the CPI forecast for early 2017 has been given as 4.8%.
This suggests that the RBI expects inflationary pressures to continue to come off over the next 18 months, despite GDP growth accelerating from 7.4% in FY16 to 8% by Q4, FY17.
The basis for the larger-than-expected rate cut seems to be this decline in the new CPI forecast for FY17.
Indications of the path ahead for all emerging economies.
A nice drop of 50 basis points – it is not going to get better.
What did anyone really expect?