RBI might easen out interest rates if inflation subsides
By Joseph Samson
Aug 17, 2012
Print    Email    RSS   
Banking and monetary regulator, the Reserve Bank of India (RBI) has stated that inflation rates would be the decisive factor while assessing a reductionin policy rates (repo rate and reverse repo rate).

July end wholesale price index (WPI) inflation level of 6.87% was less than the June's 7.25%, but RBI would only think of reducing rate cut if the inflation level reaches 6% or less. Earlier last month, C. Rangarajan, Chairman to PM's Economic Advisory Council (PMEAC) also stated consistent inflation as a barrier to reduce interest rates.

"Interest rates too fall when inflation drops, (RBI) will assess if the inflation fall is sustainable," said KC Chakrabarty, Dy Governor RBI. Mr. Chakrabarty added that 5% inflation level would be the comfort zone for deciding a reduction in rates.

The RBI would conduct a quarter review of the monetary policy on September 17. In its last policy review, mainly because of the high inflation, the RBI kept the policy rates constant. However, it reduced statutory liquidity ratio (SLR) by one percent.

Mr. P. Chidambaram on taking over the Finance Ministry earlier this month, stated higher interest rates " inhibit the investor and are a burden on every class of borrowers." He further added measures would be taken to bring down interests to make credit more affordable.


(Comments Posted : 0) Post Your Comments
Show All Comments
 Select a product:

 Select a product:

This is how a bank lends money
Carnival of Indian Personal Finance Blogs #3
Step up loans: An easy way to own a dream...
Home Loans: How to reduce your floating rate
Carnival of Indian Personal Finance Blogs #1

PINJORE: CaℒL Giℛℒs In PiNjOrE 09915787550...
PINJORE: CaℒL Giℛℒ In PiNjOrE 09915787550...
how to gate my home loan certificate

Canara Bank earned a profit of 60%. Feb 6, 2015
New Branch of Laxmi Vilas bank at Vijayawada Jan 30, 2015
Home loan EMIs expected to drop down Jan 21, 2015
Corporation Bank received MSME banking excellence award 2014 Jan 19, 2015
Home loan rates set to fall, after reduction in repo rate Jan 16, 2015
News Archive