Tuesday, May 3, 2011

Policy rates to go up by 25-50 basis points

Tomorrow is the day when the Reserve Bank of India will reveal as how much it is going to hike the key lending rates. A lot has been speculated about the hike and the experts believe that the hike can be anywhere between 25 to 50 basis points.

From quite some time now, the Central Bank has been trying to curb the inflation from the market but despite of giving its best efforts, the policies of RBI have proved to be ineffective in taming inflation rate but the inflation has already deterred the economic growth of the country a lot and that is why it is Central Bank’s primary concern.

In a statement RBI said It is important to lower inflation as quickly and as decisively as possible.”

About the condition of inflation during 2011-12 RBI said “While India's macroeconomic outlook for 2011-12 remains favourable, high oil prices pose the biggest risk to both growth and inflation…Inflation during 2011-12 is likely to moderate slowly but remain above the comfort level as the pass-through of international commodity prices is likely to continue.”

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