India’s central bank to review monetary policy Tuesday

July 28th, 2008 - 2:56 pm ICT by IANS  

Mumbai, July 28 (IANS) India’s central bank will review its monetary policy for this fiscal Tuesday, against the backdrop of the country’s annual rate of inflation jumping to a 13-year high and industry worried over the prospect of another interest rate hike. Reserve Bank of India (RBI) Governor Y.V. Reddy will conduct the first quarter review after hiking interest rates more than a dozen times since 2004 and asking banks to keep more money against deposits to curb liquidity and inflation which is now at 11.91 percent.

Industry has already expressed worries that a further squeeze in liquidity and hike in interest rates could retard growth, play havoc with corporate profits and cause job loss.

“Rise in interest rates would further push costs of production in the short run, leading to higher inflation,” warned the Associated Chambers of Commerce and Industry (Assocham), ahead of the review.

“Present interest rates are at a peak and any further rise in the rates would hamper growth as well as the employment outlook for the economy,” the chamber said after a meeting among its 150 managing committee members here.

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