Ashika Monthly Insight August 2016

STRONG ON CONSUMPTION
rural development would augment farm productivity and
rural income which in turn promote more discretionary
spending.
Globally, the bank of Japan announced an extra dose of
monetary stimulus and said it would buy ¥6 trillion
worth of exchange-traded funds annually, up from ¥3.3
trillion previously, in an attempt to stoke inflation and
growth by pumping money into the economy. It said it
would leave its asset-purchase target at ¥80 trillion a
year. Besides, the BOJ also left a key interest rate on
bank reserves unchanged at minus 0.1%. However, US
Fed at its recent policy meet has raised expectations of a
rate hike in 2016 sometime in September. The US central
bank cited significant improvement and policy makers
think the U.S. has at long last reached the promised land
of full employment. However, a recovery in the US
employment and as well as economy is positively
accepted by the investors across emerging markets since
it lifts emerging economies particularly in the long run. As
for India is concerned, the reduction in inflation over the
past two years together with exit of hawkish RBI governor
raises hopes of further rate cuts in the offing. However,
only reducing inflation and therefore interest rates in the
economy would hardly raise capacities and fuel back
demand in the key sectors and that is what the
government needs to remind itself.
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