Got to live with high interest rates
Updated: Jul 30, 2013 04:34:56pm
New Delhi, Jul 30 (KNN) Industry and other borrowers will have to live with high interest rates as the Reserve Bank of India (RBI) today retained the benchmark interest rates.
The focus of the RBI’s monetary policy is to somehow protect the rupee from the onslaught in the foreign exchange market.
RBI has clearly sacrificed once again growth and would maintain a tight fist on the money flow in the system by keeping interest rates high.
While reviewing the policy, the central bank has kept the repo rate, the rate at which it lends to commercial banks, steady at 7.25 per cent; and the cash reserve ratio (CRR), the proportion of deposits banks must keep with the RBI as cash, was also left unchanged at 4 per cent. The reverse repo rate also stands at 6.25 per cent, according to RBI.
Explaining the central bank’s stance, RBI Chief D Subbarao said that the recent liquidity tightening measures, taken to support the rupee, will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling it to revert to the policy of supporting growth with continuing vigil on inflation.
Further, the RBI will endeavour to keep inflation, which is under threat from a depreciating rupee, at 5 per cent by March end, he said.
Giving the policy guidance, the governor said "monetary policy going forward will be shaped by the consideration of supporting growth, anchoring inflation expectations and maintaining external sector stability."
Subbarao also called for urgent policy steps from the government to curtail the CAD to a sustainable level of 2.5 per cent of GDP and said that the RBI was ready to use all instruments under its command to help in the efforts.
After, the Reserve Bank of India announced the monetary policy keeping policy rates unchanged, rupee fell to 59.64 or 0.39 per cent against the US dollar.
The Indian currency had risen to 59.55 against the US dollar ahead of the policy after opening at 59.68 levels.
While reacting on the monetary policy review, ASSOCHAM said, “In a way, it is positive, as we have maintained that status quo itself is a positive in the backdrop of global headwinds and the pressure on rupee following outflows from the emerging markets.”
“Governor D Subbarao’s statement that recent tightening measures would be rolled back in a calibrated manner once stability is restored, gives a sense of assurance that the central bank is concerned about the decelerating growth,” said ASSOCHAM President, Rana Kapoor.
“The policy fine prints clearly indicate that RBI seeks to be far more accommodative for growth than in the past,” the ASSOCHAM chief added.
Speaking to the media, FICCI President R V Kanoria said that the investment environment of the country should be improved. “We have to reignite the passion of economic growth by building confidence in the economy. Enhancing investments are the need of the hour.” (KNN/SD)
Feedback: newsdesk@knnindia.co.in
The focus of the RBI’s monetary policy is to somehow protect the rupee from the onslaught in the foreign exchange market.
RBI has clearly sacrificed once again growth and would maintain a tight fist on the money flow in the system by keeping interest rates high.
While reviewing the policy, the central bank has kept the repo rate, the rate at which it lends to commercial banks, steady at 7.25 per cent; and the cash reserve ratio (CRR), the proportion of deposits banks must keep with the RBI as cash, was also left unchanged at 4 per cent. The reverse repo rate also stands at 6.25 per cent, according to RBI.
Explaining the central bank’s stance, RBI Chief D Subbarao said that the recent liquidity tightening measures, taken to support the rupee, will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling it to revert to the policy of supporting growth with continuing vigil on inflation.
Further, the RBI will endeavour to keep inflation, which is under threat from a depreciating rupee, at 5 per cent by March end, he said.
Giving the policy guidance, the governor said "monetary policy going forward will be shaped by the consideration of supporting growth, anchoring inflation expectations and maintaining external sector stability."
Subbarao also called for urgent policy steps from the government to curtail the CAD to a sustainable level of 2.5 per cent of GDP and said that the RBI was ready to use all instruments under its command to help in the efforts.
After, the Reserve Bank of India announced the monetary policy keeping policy rates unchanged, rupee fell to 59.64 or 0.39 per cent against the US dollar.
The Indian currency had risen to 59.55 against the US dollar ahead of the policy after opening at 59.68 levels.
While reacting on the monetary policy review, ASSOCHAM said, “In a way, it is positive, as we have maintained that status quo itself is a positive in the backdrop of global headwinds and the pressure on rupee following outflows from the emerging markets.”
“Governor D Subbarao’s statement that recent tightening measures would be rolled back in a calibrated manner once stability is restored, gives a sense of assurance that the central bank is concerned about the decelerating growth,” said ASSOCHAM President, Rana Kapoor.
“The policy fine prints clearly indicate that RBI seeks to be far more accommodative for growth than in the past,” the ASSOCHAM chief added.
Speaking to the media, FICCI President R V Kanoria said that the investment environment of the country should be improved. “We have to reignite the passion of economic growth by building confidence in the economy. Enhancing investments are the need of the hour.” (KNN/SD)
Feedback: newsdesk@knnindia.co.in
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