Central Bank lowers CRR, keeps rates unchanged
‘Persistently high inflation remains a key challenge
PRESS TRUST OF INDIA
Mumbai, Oct 30: Reflecting an apparent disconnect with the government, Reserve Bank today continued its cautious stance refusing to lower interest rates disappointing Finance Minister P Chidambaram and the industry while it brought down Cash Reserve Ratio by 0.25 per cent to inject Rs.17,500 crore.
Bankers by and large ruled out any immediate cut in interest rates while Chidambaram appeared not-too enthusiastic over the central bank's approach saying growth is as much a challenge as inflation and government would "walk alone" for tackling it.
"Managing inflation and inflationary expectations remains the primary focus of the monetary policy," RBI Governor D Subbarao said while unveiling the second quarter policy review.
He said that persistently high inflation remains a "key challenge" and growth has slid.
A visibly disappointed Chidambaram reacted to RBI's announcement saying, "Growth is as much a challenge as inflation. If government has to walk alone to face the challenge of growth, then we will walk alone."
"Sometimes it is best to speak. Sometimes it is best to be silent. This is the time for silence," he said.
Only yesterday in anticipation of a possible rate cut, Chidambaram unveiled a five-year fiscal consolidation road map and had hoped that "everybody acknowledges the steps which we are taking".
Today also Chidambaram reiterated the point saying "it is my hope that everyone will read and understand the government's commitment to the path of fiscal consolidation".
The policy announcement disappointed India Inc as well as stock markets.
BSE Sensex tanked by over 200 points to close at 18,430.85.
Top bankers at a press conference ruled out any immediate reduction in interest rates. However, SBI Chairman Pratip Chaudhuri said that the Asset-Liability Committee of the bank would meet in a day or two to take a view on the issue.
Highlighting the impact of interest rate cut on the retail loan demand, he said the bank has greatly benefited by rate cutting because now the growth was coming in the retail segment.
Assocham said, "the industry is disappointed that the key policy rate, the repo rate, has not been reduced. The focus continues to be on managing inflation with the growth continues to suffer."
The CRR--the portion of deposits banks park with the RBI – now stands at 4.25 per cent while Repo, the rate at which RBI lends to banks, has been retained at 8 per cent.
Reverse repo, the rate at which RBI borrows from banks, remains at 7 per cent. The CRR cut will be effective from November 3.
Lastupdate on : Tue, 30 Oct 2012 21:30:00 Makkah time
Lastupdate on : Tue, 30 Oct 2012 18:30:00 GMT
Lastupdate on : Wed, 31 Oct 2012 00:00:00 IST
- MORE FROM BUSINESS
- LPG consumers can file KYC form till Nov 15
- Valley gas dealers seek more time
- Vodafone announces winners of drive into big league
- Candles pick up demand in absence of lighting gas refills
- Central Bank lowers CRR, keeps rates unchanged
- RBI policy damp squib for markets
- Growth should be higher on agenda: Ahluwalia
- Pesky messages bother Telecom Minister
- Maruti's Q2 net falls by 5.41 pc
- SBI indicates cut in lending rate soon
Candidates Smell Rat In Recruitment Process, Seek Probe
Islamabad (Anantnag), Oct 30: The office of the Chief Education Officer here has come in the line of fire for allegedly flouting court orders and district administration directives with regard to appointment More
- Srinagar City
SYED IMRAN ALI HAMDANI
Srinagar, Oct 30: A few weeks after a VIP escort thrashed Traffic cop when the former was caught jumping red signal, another similar incident occurred Tuesday afternoon when people from an influential More
Jammu, Oct 30: In view of ensuing Durbar Move, Traffic Police Department is contemplating to deploy around 80 additional personnel to man Jammu road to regulate smooth traffic movement across the winter More
INHABITANTS SUFFER, GOVT UNMOVED
Bandipora: Belying the Government’s tall claims of equitable development, Ajas the second largest Panchayat block in Bandipora is craving for basic amenities causing immense hardships to the inhabitants More