Reserve Bank of India Raises Rates Again
Source: http://indiaeconomywatch.blogspot.com/2008/06/reserve-bank-of-india-raises-rates.htmlPosted on Wednesday, June 25th, 2008 | In India
India’s central bank raised interest rates for the second time in a month this morning and raised the amount lenders need to set aside as reserves in an attempt to slow spriraling inflation which is now running at a 13-year high. The repurchase rate was lifted to 8.5 percent from 8 percent, and the cash reserve ratio to 8.75 percent from 8.25 percent. The increase was the biggest since 2000 and followed a quarter-point rise on June 11.
Before today, Reddy had raised the repurchase rate eight times in the past two and a half years and increased the cash reserve ratio seven times since December 2006 in an ongoing attempt to slow money supply growth and cool inflation.
India’s central bank also signaled it will keep raising borrowing costs if needed. The central bank said in a faxed statement that a “heightened vigil” was now needed to anchor inflation expectations, which is really another way of saying that the RBI has been “wrong footed” by the sudden acceleration in inflation and underscores the fact that they now recognise that they blew their opportunity to raise rates more forcefully earlier in the day.
The rupee rose slightly from near a 14-month low after the announcement, rising 0.1 percent to 42.92 per dollar as of 9:41 a.m. in Mumbai.
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![]() About Edward Hugh (http://globaleconomydoesmatter.blogspot.com)
Edward Hugh is a macro economist, who specializes in growth and productivity theory, demographic processes and their impact on macro performance, and the underlying dynamics of migration flows. Hugh is a founding member and regular contributor to a number of economics weblogs, including Global Economy Matters, Demography Matters and a number of others. Edward 'the bonobo' Hugh is a Catalan economist of British extraction based in Barcelona. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again". He is currently working on a book with the provisional working title "Population, the Ultimate Non-renewable Resource". Edward also writes regularly for the demography blog Demography Matters. He also contributes to the Indian Economy blog . His personal weblog is Bonobo Land . Edward's website can be found at EdwardHugh.net. Edward follows in detail the Indian, Italian, Spanish, German and Japanese economies. He also has a more than a passing interest in the economies of Turkey and Brazil and in the emerging economies of Eastern Europe. |




