31 january 2007
takes repo rate to four-year high of 7.50 per cent
taking a cue from the rising inflation, the reserve bank
of india today announced a 0.25-per cent increase in its
key short-term lending rate, the repo rate taking it to
7.50 per cent, the highest in nearly four years.
rate is the rate at which the rbi buys securities to infuse
liquidity in the system. the move is expected to help
rein in inflation and cool the strong demand for loans.
other key rates remain unchanged the bank rate
at 6 per cent, reverse repo rate at 6 per cent and crr
at 5.5 per cent and personal home loans are expected to
inflation, which had reached a two-year high at 6.12 per
cent in the week of 6 january, before moderating to 5.95
per cent in the following week, the rbi said in its macro-economic
review on 29 january, that the underlying inflationary
pressures, caused by demand-supply mismatch in food articles,
remain unabated. against this background, the outlook
for inflation assumes criticality in terms of policy monitoring
the third quarter review of the monetary policy, it said
prices of food articles will have considerable impact
on headline inflation over the rest of the year and that
the seasonal decline in prices of food articles in the
second half of the year had been below normal.
of manufactured goods are firming up and were close to
the headline level by the end of december.
rbi also revised upwards, the gdp growth to 8.5 to 9 per
cent in 2006-07 as compared to 8 per cent projected in
mid- term review and 7.5 to 8 per cent (see: gdp
growth rate revised to 9 per cent for 2005-06)
in the annual policy statement and first quarter review.
growth rates of 9.1 per cent in the first half of 2006-07,
the policy review said that growth momentum would be sustained
in the third quarter with some setbacks in agriculture
reports on finance diary