Topic OF THE DAY :- “A) Inflation conundrum”
A Weak Performance And Low Inflation May Persuade The RBI To Go For An Interest Rate Cut
The multi-month low retail and wholesale inflation prints for December pose an interesting challenge for policymakers and the central bank. Inflation in Consumer Price Index (CPI), at 2.19% in December, is at an 18-month low, while the WPI, at 3.8%, is at an eight-month low. The Reserve Bank appears to have been blindsided by the CPI number, which is way below projections made during its last few monetary policy pronouncements. The RBI has maintained a CPI projection of 4.4-4.8% for the second half of fiscal 2019. Even in the October policy announcement, the bank projected 3.8-4.5% retail inflation in the second half with upside risk, and even changed its policy stance to “calibrated tightening” from “neutral”. The MPC and the RBI may well want to reassess the robustness of their inflation projection mechanism in light of the data coming in. When the new Governor, Shaktikanta Das, sits down with the monetary policy committee (MPC) in early February he may well have to return to a “neutral” stance given the soft trends in headline CPI. There may even be pressure on him to look at a rate cut, especially given the weak economic data coming in — factory output growth was a low 0.5% in November with manufacturing showing acontraction. The automobile industry, the first to feel the effect of an economic slowdown, has seen sales falling over the last two months.
The inflation data have also thrown a curveball at policymakers in that their different components show divergent trends. So, while headline CPI inflation is trending lower, core inflation is still sticky at close to 6%. Again, there is a divergence between core rural and urban inflation — the former is trending higher at 6.34% while the latter is heading downward at 5.26% in December. Curiously, rural health and education index numbers are high. The point with all this divergence in data is that monetary policymaking is a challenge. Governor Das alluded to this in a recent speech where he pointed to the divergences and volatility in different sub-groups as a major challenge in inflation assessment and projection. But the broader question is whether the interest rate structure is lagging behind the big structural change in inflation in the last few years. According to Mr. Das, headline CPI inflation has moderated from around 10% in 2012-13 to 3.6% in 2017-18 and 3.7% in April-December this fiscal. Yet the nominal interest rate structure has not changed significantly, leading to rather high real interest rates.Prominent policymakers, including principal economic adviser Sanjeev Sanyal, have called for the RBI to take a re-look at the interest rate structure. It will be interesting to watch how the RBI under the new Governor reacts to these calls.
- B) A wide Democratic field
Party Leaders Seek To Capitalise On Soaring Anti-Trump Sentiment To Enter The Primaries
As expected, the array of presidential hopefuls for the 2020 U.S. election has widened considerably on the Democratic Party side, with at least eight candidates declared running, another six likely to run, and a further eight potential entrants sitting on the fence. Some analysts put the total size of the potential Democratic aspirational pool at 34. The latest addition to the list was Kamala Harris, a first-term Senator from California and daughter of Indian and Jamaican immigrants. Ms. Harris enters this crowded arena with the heft of her star power, having accumulated considerable political capital through her tough questioning of President Donald Trump’s cabinet nominees — including then Attorney General Jeff Sessions, who admitted that being grilled by Ms. Harris made him “nervous” — and other notables. Nevertheless, she was beaten to it by the New Year’s Day announcement of Massachusetts Senator Elizabeth Warren, a top-tier Democrat who also took on Mr. Trump over policy issues but attracted criticism for an unnecessary controversy over a DNA test to establish her Native Americanancestry. While it is likely that the two Senators will remain on the ballot when the first state, Iowa, heads to the primaries in early February 2020, most entrants between now and then are expected to drop out as their popularity and donor-support figures come into sharper focus.
That is the real question at the heart of America’s complex Democratic primary: why are so many candidates throwing their hats in the ring at this juncture, and what does it tell us about the challenge that the ultimate nominee will pose to Mr. Trump’s re-election prospects? First, whoever wins the nomination will inherit the burden — and benefits — of the considerable anti-Trump sentiment that is swirling across diverse pockets of the country. An early indication of this likely outcome lies in the fact that most prospective candidates have announced policy positions that are situated in the centre-left of the American political spectrum, positioning themselves against Trump on immigration, health care, criminal justice and more. An example of such a policy position is Medicare-for-All, which not only Ms. Harris and Ms. Warren, but some newcomers too, such as Julián Castro, the former mayor of San Antonio, Texas, consider a part of their core agenda. Second, the Democratic universe is enthusiastic about this race as Mr. Trump not only lost the popular vote in 2016, by 46% to 48%, nearly three million votes, but also, currently, has the worst net approval rating of any post-World War II U.S. President. However, a big challenge that looms for Democratic candidates is to gauge the way independent voters, who often keep their voting preferences secret from pollsters, lean. These voters were the undoing of Hillary Clinton in the Rust Belt states, and they could again tip the scales back toward the nativist populism of their Commander-in-Chief.
MEANINGS AND WORDS
1) pose
Meaning : present or constitute (a problem or danger).
Synonyms : demand
Antonyms : disorder
Example : “the sheer number of visitors is posing a threat to the area”
2) pronounce
Meaning : declare or announce in a formal or solemn way.
Synonyms : utter
Antonyms : conceal
Example : “allow history to pronounce the verdict”
3) stance
Meaning : the way in which someone stands, especially when deliberately adopted (as in cricket, golf, and other sports); a person’s posture.
Synonyms : attitude
Antonyms : truancy
Example : “she altered her stance, resting all her weight on one leg”
4) reassess
Meaning : consider or assess again, in the light of new or different factors.
Synonyms : reevaluate
Antonyms : ignore
Example : “we have decided to reassess our timetable”
5) robustness
Meaning : the quality or condition of being strong and in good condition.
Synonyms : firmness
Antonyms : idleness
Example : “the overall robustness of national and international financial systems”
6) contraction
Meaning : the process of becoming smaller.
Synonyms : recession
Antonyms : increase
Example : “the general contraction of the industry did further damage to morale”
7) thrown
Meaning : propel (something) with force through the air by a movement of the arm and hand.
Synonyms : heaved
Antonyms : tossed
Example : “I threw a brick through the window”
8) divergent
Meaning : tending to be different or develop in different directions.
Synonyms : conflicting
Antonyms : agreeing
Example : “divergent interpretations”
9) alluded
Meaning : suggest or call attention to indirectly; hint at.
Synonyms : imply
Antonyms : advertise
Example : “she had a way of alluding to Jean but never saying her name”
10) lagg
Meaning : fail to keep up with another or others in movement or development.
Synonyms : delayed
Antonyms : smart
Example : “they waited for Tim who was lagging behind“
11) Prominent
Meaning : important; famous.
Synonyms : beetling
Antonyms : common
Example : “she was a prominent member of the city council”
12) declared
Meaning : openly or formally asserted or announced.
Synonyms : stated
Antonyms : undeclared
Example : “despite the company’s declared good intentions, some remained sceptical”
13) entrants
Meaning : a person or group that enters or takes part in something.
Synonyms : contestant
Antonyms : expert
Example : “the prize will be awarded to the entrant who wins the tiebreak”
14) aspirational
Meaning : having or characterized by aspirations to achieve social prestige and material success.
Synonyms : ambition
Antonyms : dislike
Example : “young, aspirational, and independent women”
15) accumulated
Meaning : gather together or acquire an increasing number or quantity of.
Synonyms : accrue
Antonyms : contract
Example : “investigators have yet to accumulate enough evidence”
16) Nevertheless
Meaning : in spite of that; notwithstanding; all the same.
Synonyms : though
Example : “statements which, although literally true, are nevertheless misleading”
17) attracted
Meaning : cause to come to a place or participate in a venture by offering something of interest or advantage.
Synonyms : entice
Antonyms : disenchant
Example : “a campaign to attract more visitors to Shetland”
18) criticism
Meaning : the expression of disapproval of someone or something on the basis of perceived faults or mistakes.
Synonyms : critique
Antonyms : neglect
Example : “he received a lot of criticism”
19) establish
Meaning : achieve permanent acceptance or recognition for.
Synonyms : enact
Antonyms : destroy
Example : “the principle of the supremacy of national parliaments needs to be firmly established”
20) ancestry
Meaning : one’s family or ethnic descent.
Synonyms : descent
Antonyms : effect
Example : “he was proud of his Irish ancestry”
21) entrants
Meaning : a person or group that enters or takes part in something.
Synonyms : contestant
Antonyms : expert
Example : “the prize will be awarded to the entrant who wins the tiebreak”
22) juncture
Meaning : a particular point in events or time.
Synonyms : exigency
Antonyms : advantage
Example : “it is difficult to say at this juncture whether this upturn can be sustained”
23) prospects
Meaning : the possibility or likelihood of some future event occurring.
Synonyms : chance
Antonyms : impossibility
Example : “there was no prospect of a reconciliation”
24) inherit
Meaning : receive (money, property, or a title) as an heir at the death of the previous holder.
Synonyms : acquire
Antonyms : forfeit
Example : “she inherited a fortune from her father”
25) indication
Meaning : a sign or piece of information that indicates something.
Synonyms : gesture
Antonyms : misinformation
Example : “the visit was an indication of the improvement in relations between the countries”
26) prospective
Meaning : expected or expecting to be the specified thing in the future.
Synonyms : expected
Antonyms : concurred
Example : “she showed a prospective buyer around the house”
27) enthusiastic
Meaning : having or showing intense and eager enjoyment, interest, or approval.
Synonyms : anxious
Antonyms : apathetic
Example : “he could be wildly enthusiastic about a project”
28) looms
Meaning : an apparatus for making fabric by weaving yarn or thread.
Synonyms : dominate
Antonyms : decline
Example : “You cannot weave truth on a loom of lies.”
29) preferences
Meaning : a greater liking for one alternative over another or others.
Synonyms : inclination
Antonyms : dislike
Example : “her preference for white wine”
30) widened
Meaning : make or become wider.
Synonyms : enlarge
Antonyms : compress
Example : “we should widen the scope of our investigation”
