Price stability needed to sustain growth: Pranab

June 16th, 2011 - 4:33 pm ICT by IANS  

Pranab Mukherjee New Delhi, June 16 (IANS) India need to have better price stability to sustain economic growth in the medium-term, Finance Minister Pranab Mukherjee said Thursday, and added that the Reserve Bank of India’s move to hike lending rates was aimed to curb inflation.

“This is on expected lines, as the core inflation hardened to 8.71 percent in May as compared to 7.93 percent in April,” Mukherjee said while reacting on the 25 basis points hike in lending rates by the RBI, India’s central bank.

The Reserve Bank raised repo rate by 25 basis points to 7.5 percent. As per the structural changes announced in the monetary policy for 2011-12, the reverse repo rate stands automatically revised to 6.5 percent. This is the tenth time the RBI has raised interest rates since March 2010.

“The RBI has sought to maintain an interest rate environment that moderates inflation and checks inflationary expectations,” finance minister said in a statement after the RBI’s mid-quarter monetary policy review.

Terming the RBI’s move on expected line, Mukherjee said there was a need to have better price stability for sustaining growth in the medium-term.

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