Online edition of India's National Newspaper
Wednesday, Nov 01, 2006
ePaper
Google



Front Page

News: ePaper | Front Page | National | Tamil Nadu | Andhra Pradesh | Karnataka | Kerala | New Delhi | Other States | International | Opinion | Business | Sport | Miscellaneous | Engagements |
Advts:
Classifieds | Jobs | Obituary |



Front Page Printer Friendly Page   Send this Article to a Friend

RBI moves to curb inflation

Special Correspondent

MUMBAI: Worried at the prospects of price increase and higher rates of inflation, the Reserve Bank of India on Tuesday introduced measures to make it costlier for banks to borrow funds from the apex bank for the short-term.

By raising the "repo rate" from 7 to 7.25 per cent and at the same time not increasing the rate the RBI would pay banks for borrowing money from them in the short-term, the apex bank has signalled a higher cost of finance in the economy over a period.

Banks will be motivated to pay higher interest on deposits mobilised from the public as a result of the RBI decision and this in turn will force them to raise their lending rates.

Y.V. Reddy, Governor, RBI, unveiling the mid-term review of its monetary policy, said there were enough reasons to worry about a possible increase in inflation despite the downtrend in international oil prices.

A portion of the oil price increase had a "permanent element" which might have to be passed on to the consumer sooner or later. Other factors which heightened inflationary expectations were an increase in the prices of primary food articles that was more than in the case of other goods, productivity gains in the economy being offset by a "squeeze" on profits owing to international competition and an uptrend in commodity prices in world markets.

Related Stories:
Stability for growth

Printer friendly page  
Send this article to Friends by E-Mail



Front Page

News: ePaper | Front Page | National | Tamil Nadu | Andhra Pradesh | Karnataka | Kerala | New Delhi | Other States | International | Opinion | Business | Sport | Miscellaneous | Engagements |
Advts:
Classifieds | Jobs | Obituary | Updates: Breaking News |

AmanTel
LIBA Rubber India Yougworld Quiz 2006


News Update


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | The Hindu ePaper | Business Line | Business Line ePaper | Sportstar | Frontline | Publications | eBooks | Images | Home |

Copyright 2006, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu