India's central bank raised its key interest rate by 25 basis points and indicated that it is open to the possibility of further rate increases, as core inflation stays elevated.
The increase in the key repo rate by 25 basis points to 6.5 per cent on Wednesday was in line with expectations.
But remarks by the governor of the Reserve Bank of India, Shaktikanta Das, which pointed to potential further tightening, surprised markets.
“We need to see a decisive moderation in inflation,” Mr Das said. “We have to remain unwavering in our commitment to bring down inflation.”
The RBI forecast inflation at 6.5 per cent in the April 2022 to March 2023 financial year, coming down to 5.3 per cent in the next financial year.
“Considerable uncertainties remain on the likely trajectory of global commodity prices, including [the] price of crude oil,” Mr Das said.
Despite this, he was upbeat about India's economy, saying that it was resilient.
The RBI is projecting gross domestic product growth of 6.4 per cent in the current financial year.
High inflation became a pressing issue last year in India, partly due to the effect on commodity prices of Russia's war in Ukraine.
Food prices also rose as crops were destroyed by extreme weather in parts of India.
To tackle high prices the RBI has raised interest rates six times, by a total of 250 bps, since May last year.
“The continued rate hikes by the Bank of England, the ECB [European Central Bank] and the US Federal Reserve and the implications of these in the foreign exchange market influenced the decision of the Reserve Bank of India to go for another rate hike,” said Sujan Hajra, chief economist and executive director at Anand Rathi Shares and Stock Brokers in Mumbai.
But its latest rate increase was smaller than previous increases, as inflation in India eased recently.
Retail inflation came down to a one-year low of 5.72 per cent in December on softening food prices.
This is within the RBI's target of keeping inflation between 2 per cent and 6 per cent.
Assuming that inflation remains under control, some economists expect Wednesday's rate increase to be the last change in the current cycle, despite the RBI's hints that it is open to further rate increases.
“Unless there is an unexpected flare in inflation, we would expect the Reserve Bank of India to maintain an unchanged policy rate for the remainder of 2023,” Mr Hajra said.
“This would be positive both for the debt and equity markets.”
But others believe there is scope for another small raise.
“Inflection points are always difficult to call, but I think that the rate hiking cycle of the RBI may not yet be over,” said Indranil Pan, chief economist at Indian private lender Yes Bank.
“We remain open to another 25 basis-point increase in the repo rate in April or even later and [the move] will critically depend on the inflation prints in the months ahead."
The latest rate increase will further raise the cost of borrowing as it gets passed on to consumers and businesses taking out loans.
“There is no denying the fact that the increase in the repo rate would definitely [affect] housing affordability,” said Ramani Sastri, chairman and managing director of Sterling Developers.
“The repeated rate hikes may have a short-term impact on overall housing demand. This comes at a time when the real estate sector had shown recovery.”
The benchmark S&P BSE Sensex gave up some of its earlier gains following the RBI's rate announcement, but it remained in positive territory in morning trade.
The India rupee was flat at about 82.6 against the US dollar.
But some analysts expect the rupee to weaken. It “now looks poised to see 83 or even 83.4”, said Anand James, chief market strategist at Geojit Financial Services.
A weaker rupee enables Indians working in the UAE and other GCC states to send more money home.
“Remittance growth for India in the first half [of the current financial year] was around 26 per cent, more than twice the World Bank’s projection for the year,” said the RBI's Mr Das.
“This is likely to remain robust owing to better growth prospects of the Gulf countries.”
Pathaan
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Dark Souls: Remastered
Developer: From Software (remaster by QLOC)
Publisher: Namco Bandai
Price: Dh199
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
HEADLINE HERE
- I would recommend writing out the text in the body
- And then copy into this box
- It can be as long as you link
- But I recommend you use the bullet point function (see red square)
- Or try to keep the word count down
- Be wary of other embeds lengthy fact boxes could crash into
- That's about it
RESULT
Leeds United 1 Manchester City 1
Leeds: Rodrigo (59')
Man City: Sterling (17')
Man of the Match: Rodrigo Moreno (Leeds)
Schedule
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Friday’s fixture
6.15pm: Al Wahda v Hatta
6.15pm: Al Dhafra v Ajman
9pm: Al Wasl v Baniyas
9pm: Fujairah v Sharjah
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More from Armen Sarkissian
Singham Again
Director: Rohit Shetty
Stars: Ajay Devgn, Kareena Kapoor Khan, Ranveer Singh, Akshay Kumar, Tiger Shroff, Deepika Padukone
Rating: 3/5
The specs
Engine: 3.0-litre 6-cyl turbo
Power: 435hp at 5,900rpm
Torque: 520Nm at 1,800-5,500rpm
Transmission: 9-speed auto
Price: from Dh498,542
On sale: now
Results
1. New Zealand Daniel Meech – Fine (name of horse), Richard Gardner – Calisto, Bruce Goodin - Backatorps Danny V, Samantha McIntosh – Check In. Team total First round: 200.22; Second round: 201.75 – Penalties 12 (jump-off 40.16 seconds) Prize €64,000
2. Ireland Cameron Hanley – Aiyetoro, David Simpson – Keoki, Paul Kennedy – Cartown Danger Mouse, Shane Breen – Laith. Team total 200.25/202.84 – P 12 (jump-off 51.79 – P17) Prize €40,000
3. Italy Luca Maria Moneta – Connery, Luca Coata – Crandessa, Simone Coata – Dardonge, Natale Chiaudani – Almero. Team total 130.82/198.-4 – P20. Prize €32,000
Temple numbers
Expected completion: 2022
Height: 24 meters
Ground floor banquet hall: 370 square metres to accommodate about 750 people
Ground floor multipurpose hall: 92 square metres for up to 200 people
First floor main Prayer Hall: 465 square metres to hold 1,500 people at a time
First floor terrace areas: 2,30 square metres
Temple will be spread over 6,900 square metres
Structure includes two basements, ground and first floor
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A list of the animal rescue organisations in the UAE
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
What is safeguarding?
“Safeguarding, not just in sport, but in all walks of life, is making sure that policies are put in place that make sure your child is safe; when they attend a football club, a tennis club, that there are welfare officers at clubs who are qualified to a standard to make sure your child is safe in that environment,” Derek Bell explains.
More on animal trafficking
Nancy 9 (Hassa Beek)
Nancy Ajram
(In2Musica)
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
