RBI hikes repo rates again in less than couple of months
June 25, 2008
The Reserve Bank of India, or RBI, has moved yet again in its ongoing fight against rising inflation, reports CNBC-TV18. It has hiked the Cash Reserve Ratio, or CRR, which is the portion of deposits that banks need to keep as cash with the central bank, by a steep 50 basis points. This hike will take effect in two stages. First, a 25 basis point hike on July 5, and another 25 basis point hike on July 19. By July 19, CRR will stand at 8.75%.
It has also hiked the repo rate by 50 basis points, which will be effective immediately.The central bank said there has been a turnaround in production of durables. “Consumption demand seems to be reviving.” The rise in non-oil imports reflects domestic demand pressure, it said. “Aggregate demand pressures are strongly in evidence. The priority now is to eschew the build-up in inflation pressures.” Read More