The Hindu : Business : `Lending rates will not be affected'

Online edition of India's National Newspaper
Friday, Apr 29, 2005

Business

Business

`Lending rates will not be affected'

Special Correspondent

NEW DELHI: Conceding that the rising oil prices in the global market was "a matter of concern", the Union Finance Minister, P. Chidambaram, on Thursday said the Government would take adequate steps to ensure that prices remained stable.

Hailing the Reserve Bank of India's monetary and credit policy at a press briefing here, Mr Chidambaram told newspersons that although the central bank had warned that the rising global oil prices might put pressure on domestic prices, inflation was under control.

"There cannot be a knee-jerk reaction on inflation. The recent movement in inflation is because of base effect," he said.

On the increase in the reverse repo rates by 25 basis points, Mr. Chidambaram was confident that the step taken by the RBI would not lead to banks raising their lending rates. ". There is enough liquidity in the market and, therefore, lending rate will be benign," he said.

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