RBI hikes key policy rates yet again to tackle inflation
As inflation rose from 8.7% in April 2011 to 9.1% in May 2011, the
Reserve Bank of India (RBI) couldn't afford to ignore the soaring prices
in its mid-quarter policy review.
As inflation rose from 8.7% in April 2011 to 9.1% in May 2011, the Reserve Bank of India (RBI) couldn't afford to ignore the soaring prices in its mid-quarter policy review.
The RBI resumed its 'baby step' and increased the repo rate (at which it lends to banks) by 0.25 percentage point to 7.5% on 16 June 2011. This is the tenth hike since March 2010.
With rates being hiked in almost every policy review in the recent past, the market was prepared for the monetary tightening measure.
"Short-term loans will become dearer after the hike," says R. Murali Krishnan, head, institutional broking, Karvy Stock Broking. "As inflation is still high, there could be further hikes in case inflationary pressures persist."
The RBI resumed its 'baby step' and increased the repo rate (at which it lends to banks) by 0.25 percentage point to 7.5% on 16 June 2011. This is the tenth hike since March 2010.
With rates being hiked in almost every policy review in the recent past, the market was prepared for the monetary tightening measure.
"Short-term loans will become dearer after the hike," says R. Murali Krishnan, head, institutional broking, Karvy Stock Broking. "As inflation is still high, there could be further hikes in case inflationary pressures persist."
