RBI’S interest rate hikes for taming inflation: Meena

August 5th, 2011 - 8:22 pm ICT by IANS  

New Delhi, Aug 5 (IANS) Interest rate hikes by the Reserve Bank of India (RBI) were meant to control inflation even though it resulted in higher cost of borrowing, Minister of State for Finance Namo Narain Meena said Friday.

“RBI’s monetary policy stance aims to maintain an interest rate environment that moderates inflation and anchors inflationary expectation,” Meena informed the Lok Sabha in a written reply.

According to Meena, the interest rate hikes which increase the cost of borrowing would provide relief to the public which is reeling under rising inflationary pressures.

“While cost of borrowing goes up, on balance lower levels of inflation would provide greater relief to the common man,” Meena said.

Meena added: “On an ongoing basis, government has been providing interest subventions for key sectors of economy and sections of the society.”

Recently RBI in its first quarter review of monetary policy 2011-12 raised the repo rate from 7.5 to 8.0 percent and reverse repo rate under the liquidity adjustment facility.

After the interest rate hike, public lenders have also raised their deposit and lending interest rates.

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