India’s central bank hits pause button on rate hikesDecember 16th, 2011 - 1:59 pm ICT by IANS
Mumbai, Dec 16 (IANS) India’s central bank Friday kept key rates unchanged - after as many as 13 successive hikes since early 2010 - in a bid to spur growth, while also drawing some comfort from the easing of annual inflation.
“While inflation remains on its projected trajectory, the downside risks to growth have clearly increased,” the Reserve Bank of India (RBI) said in a statement, presenting the mid-quarter review of the monetary policy for the current fiscal.
“The guidance given in the second quarter was that, based on the projected inflation trajectory, further rate hikes might not be warranted. In view of the moderating growth momentum and higher downside risks to growth, this guidance is being reiterated.”
The central bank also said that from this point onward, the effort would be to reverse the cycle, which effectively means industry can even hope for some easing of interest rates in the coming months.
The review came against the backdrop of India’s annual rate of inflation falling to 9.1 percent in November, while the food inflation fell to 4.35 percent for the week ended Dec 3.
But factory output declined 5.1 percent in October, while the gross domestic product saw a mere 6.9 percent growth during the second quarter of this fiscal, which was the lowest in over two years.
The Reserve Bank said it maintained its projection for annual inflation at 7 percent for end-March, while reserving its forecast on growth for the third quarter review, which is expected in January.
- With inflation easing, India's central bank halts rate hikes (Roundup) - Dec 16, 2011
- India's central bank halts rate hikes on lower inflation (Lead) - Dec 16, 2011
- Rate pause will help regain growth momentum: Pranab - Dec 16, 2011
- India's central bank infuses more money in system - Jan 24, 2012
- India's central bank infuses more money into system (Lead) - Jan 24, 2012
- Shifting focus to growth, RBI infuses Rs.320 bn into system (Roundup) - Jan 24, 2012
- Highlights of Indian central bank's monetary policy update - Jul 26, 2011
- India Inc welcomes RBI's decision to pause rate hike - Dec 16, 2011
- After petrol prices, higher interest rates set to bite - Sep 16, 2011
- Sensex plummets in late trade, closes 346 points down (Lead) - Dec 16, 2011
- Inflation-focussed RBI hikes rates again, may hold off another revision - Oct 25, 2011
- Sensex slips sharply in afternoon trade - Dec 16, 2011
- Indian economy hit by high inflation, slowing growth (2011 in Retrospect) - Dec 28, 2011
- Highlights of the third quarter review of monetary policy - Jan 24, 2012
- Growth will improve, but inflation will stay sticky: RBI - Apr 16, 2012
Tags: annual rate of inflation, backdrop, bank of india, downside risks, gross domestic product, growth momentum, guidance, interest rates, mid quarter, monetary policy, pause button, rate hikes, rate of inflation, rbi, reserve bank of india, s central, second quarter, trajectory