Ummid Assistant

Jamia Millia launches courses on China, Afghanistan

IGNOU launches value education programme for teachers

Welcome Guest! You are here: Home » Business & Economy

Inflation-focussed RBI hikes rates again, may hold off another revision

Tuesday October 25, 2011 05:49:33 PM, IANS

Mumbai: The Reserve Bank of India (RBI) Tuesday hiked key interest rates by 25 basis points -- the 13th straight increase to curb inflation -- but added that it may hold off another upward revision if inflation comes down as predicted.

The repurchase rate, or the interest the central bank levies on short-term borrowing by commercial banks, has been raised to 8.5 percent from 8.25 percent. Automatically, the reverse repurchase rate, or interest on short-term lending, gets hiked to 7.5 percent from 7.25 percent.

The current increase in repo rate will however, make auto, housing and commercial loans dearer once again.

The rate hikes were effected by Reserve Bank of India (RBI) Governor Duvvuri Subbarao during the second quarter review of the apex bank's monetary policy for this fiscal.

"The monetary policy tightening effected so far has helped in containing inflation and anchoring inflation expectations, even as both remain elevated. While the impact of past monetary actions is still unfolding, it is necessary to persist with the anti-inflationary stance," Subbarao said while announcing the measures.

The governor however, said that inflation, which was still way beyond the central bank's comfort level, would start falling from December and be at 7 percent by March 2012.

This, Subbarao said, would "provide some room for monetary policy to address growth risks in the short run".

"With this in mind, notwithstanding current rates of inflation persisting till November, the likelihood of a rate action in the December mid-quarter review is relatively low. Beyond that, if the inflation trajectory conforms to projections, further rate hikes may not be warranted."

Commercial banks are widely expected to pass on the interest rate burden to customers, which could made consumer and corporate loans dearer, even while raising the interest outgo on existing loans, along with a longer tenure for repayment.

Effectively, the RBI announced the end of rate tightening cycle, after today's 25 basis points repo rate hike to 8.5 percent, going to the extent of saying that the likelihood and need for further rate hike is not significant," said Jay Shankar, chief economist - director, Religare Capital Markets.

"This brings in the much needed certainty in policy trajectory, and should help improve investment climate to that extent, he added.

Industry also heaved a sigh of relief as the RBI signalled an end to the rate hikes and said it was high time the government addressed supply side issues.

"Some areas that require immediate attention include clarity on policies with regard to land and the availability of critical inputs such as electricity," said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII).

The central bank also revised economic growth projections for the current fiscal downwards to 7.6 percent from the earlier prediction of 8 percent.

"The growth projection was on the downside mainly on account of slowing down of the global economy and moderating domestic demand," said the RBI Governor.

"Slower global growth will have an adverse impact on domestic growth, particularly on industrial production, given the rising inter-linkages of the Indian economy with the global economy."

In the policy review, the RBI also de-regulated savings bank deposit interest rates, which will help individuals earn more on their funds parked with banks, as lenders will compete with each other to get more deposits.

 

 

 

 

Bookmark and Share

Home | Top of the Page

 

Comments

Note: By posting your comments here you agree to the terms and conditions of www.ummid.com

Comments powered by DISQUS

 

 

 

Top Stories

AMU Maharashtra: Expert team to inspect lands for sub centre October 26

A high level team led by Aligarh Muslim University (AMU) Vice Chancellor Prof PK Abdul Aziz is visiting Maharashtra on October 26 to inspect  »

Aligarians in Maharashtra throw weight behind AMU Malegaon

We see our future in AMU Malegaon: Write hundreds of students to VC

 

  Most Read

Turkey quake: Scores still under rubble, toll reaches 279

Hundreds of people are still believed to be buried under the rubble as the toll in Sunday's 7.2 magnitude earthquake in eastern Turkey rose to 279. The quake in Van province also injured about 1,300  »

India must move towards MMP electoral system: Experts at Int’l workshop in Berlin

Realizing the urgent need for electoral reforms in India towards a proportionate electoral system, the Campaign for Electoral Reforms in India, (CERI), and the Platform-Dalit Solidarity in Germany together organized an International Workshop of experts on electoral systems from Germany, Norway  »

 

  News Pick

Help pours in for AIIMS patient Shehnaz

A day after IANS reported on 17-year-old Shehnaz, who spent over a month outside the All India  »

Outside AIIMS canteen, Shehnaz lies waiting for death

The more the merrier, says Mizo man with 39 wives, 94 kids

Many would consider it an achievement of Biblical proportions! With 39 wives and more than 120 children and grandchildren, all staying together, a tribal Christian cult leader in the northeastern state of Mizoram could »

Varsity row over 'singling out' northeastern students resolved

A row over an alleged attempt by the University of Hyderabad to single out students from the northeast in its drive against drinking and drug use on campus was resolved with the students expressing satisfaction  »

 

Picture of the Day

Girl students of a local school displaying the post cards posted to the AMU VC appealing him to speed up the process for the establishment of AMU centre in Malegaon

(Photo: ummid.com)

 

 
 
 
 
 

RSS  |  Contact us

 

| Quick links

News

 

Subscribe to

Ummid Assistant

 

National

Religion

RSS

Scholarships

About us

International

Culture

Twitter

Government Schemes

Feedback

Regional

History

Facebook

Education

Register

Politics

Opinion

Newsletter

Contact us

Business

Career

     

Education

     

 

 

Ummid.com: Disclaimer | Terms of Use | Advertise with us | Link Exchange

Ummid.com is part of the Awaz Multimedia & Publications providing World News, News Analysis and Feature Articles on Education, Health. Politics, Technology, Sports, Entertainment, Industry etc. The articles or the views displayed on this website are for public information and in no way describe the editorial views. The users are entitled to use this site subject to the terms and conditions mentioned.

© 2010 Awaz Multimedia & Publications. All rights reserved.