Over the last six months there has been a sudden spurt in inflation. The disturbing fact is that there are no signs of it coming down in the near future. So far, the Reserve Bank of India (RBI) has increased the repo rate and the cash reserve ratio (CRR) in its attempt to fight inflation. By increasing the repo rate and the CRR, the RBI indirectly increases the cost of funds for banks.
These measures seem ineffective as inflation has touched a 7-year high on the back of high oil prices. Hence, there is a possibility that the RBI may increase interest rates in the near future , which is considered to be a more effective measure to fight inflation. Read more
Courtesy: economictimes.indiatimes.com
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