Reserve Bank Of India Raises Two Interest Rates

Reserve Bank Of India Raises Two Interest Rates

The Reserve Bank of India (RBI) on Tuesday raised interest rates for the sixth time this year to combat inflation remains stubbornly well above its comfort zone of 5-6%.

RBI repo rate by 25 bp led (which lends to commercial banks) to 6.25% and repo rate by 25 basis points (which pays for deposits to banks) to 5.25 percent. CRR stood at 6%.

India has been the aggressive nation in Asia to increase interest rates to curb inflation that the economy is prospering countries following the global financial crisis.

"Based solely on current trends in growth and inflation, the Reserve Bank considers that the rate of equity risk in the immediate future is relatively low," said Governor Duvvuri Subbarao RBI in its second review of quarter monetary policy.

The annual index of wholesale prices for September, the last data key prior to the examination of the central bank on Nov. 2, rose 8.62 percent against 8.5 percent in August. The annual food inflation price fell to 13.75 percent in mid-October, but remains high, partly because demand growing income increase.

Earlier Monday, the data show that Asia is the third economy recorded strong growth in production in October with HSBC Markit Purchasing Managers' Index rose to 57.2 against 55.1 in September. A reading above 50 indicates expansion.The RBI said inflation, which stood at 8.62% in September, is "above the level of comfort", and has kept the economic growth outlook for the current fiscal year, to 8.5 %.

He noted that the uncertainty of global prospects and the dominance of supply rigidities in some sectors, the stiffness to provide the path of inflation is a major challenge for monetary policy.RBI noted that the appropriations for non-food sectors were healthy and that the loan disbursals to the agricultural sector was in decline. "In the future, the prospects for growth-inflation dominates the policy response," lead bank, adding that "the overall inflation remains a concern and a political priority. "

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