8/9/2016, 8:51 AM (Source: TeleTrader)
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RBI sees clouds over global economy

The Reserve Bank of India (RBI) provided an insight into global economy, as it explained the decision to keep its key interest rates unchanged.

The central bank of India said that "several developments have clouded the outlook for the global economy," since its monetary policy meeting in June. Lower inventory investment in the United States was partly atoned with strong employment. Brexit and unimpressive banking stress test results raised uncertainty in the Eurozone. Japan's deflation and stronger yen slowed industrial production, prompting fiscal stimulus.

Chinese economic growth stabilised in the second quarter "on the back of strong stimulus." Manufacturing activity was weak in July, while "smaller firms recorded an uptick in new orders." Brazil and Russia are recovering from recession, but were still fragile "due to policy uncertainties and soft commodity prices."

"World trade remains sluggish in the first half of 2016," according the RBI report, and international financial markets "did not anticipate" the outcome of Brexit vote. Temporary currency volatility has since subsided, excluding the sterling. Crude prices remain volatile, while commodity prices, except precious metals, "remain soft due to weak demand," concludes the RBI assessment of the world economy.

Baha Breaking News (BBN) / ZR