India holds interest rates steady
Source: Agencies |
December 17, 2011, Saturday
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Print Edition
Print Edition
INDIA'S central bank held key interest rates steady as it struggles to foster growth amid high inflation, and took steps to curb currency speculation, lifting the rupee from all-time lows yesterday.
The Reserve Bank of India kept the short-term lending rate, or repo rate, at 8.5 percent and the reverse repo rate - the rate it pays to banks for deposits, at 7.5 percent. The bank also kept the cash reserve ratio for commercial lenders unchanged at 6 percent.
"Downside risks to growth have clearly increased," the bank said. "However, it must be emphasized that inflation risks remain high."
Ambushed by a horde of reporters yesterday, RBI Governor Duvvuri Subbarao declined to say when the bank would start lowering rates. "I cannot speculate on the timing because I don't know."
Growth slipped to a two-year low of 6.9 percent in the September quarter, and industrial production fell 5.1 percent in October, its first contraction since June 2009. But inflation remains above 9 percent.
The bank's 13 rate hikes since March 2010 have kept it out of step with many other emerging economies, which have started to ease monetary policy as global growth slows.
The rupee, which has been trading at record lows, strengthened yesterday, after the central bank took steps to curb speculation. Since US debt was downgraded on August 5, the rupee has fallen about 17 percent, breaching 54 to the dollar on Thursday.
The Reserve Bank of India kept the short-term lending rate, or repo rate, at 8.5 percent and the reverse repo rate - the rate it pays to banks for deposits, at 7.5 percent. The bank also kept the cash reserve ratio for commercial lenders unchanged at 6 percent.
"Downside risks to growth have clearly increased," the bank said. "However, it must be emphasized that inflation risks remain high."
Ambushed by a horde of reporters yesterday, RBI Governor Duvvuri Subbarao declined to say when the bank would start lowering rates. "I cannot speculate on the timing because I don't know."
Growth slipped to a two-year low of 6.9 percent in the September quarter, and industrial production fell 5.1 percent in October, its first contraction since June 2009. But inflation remains above 9 percent.
The bank's 13 rate hikes since March 2010 have kept it out of step with many other emerging economies, which have started to ease monetary policy as global growth slows.
The rupee, which has been trading at record lows, strengthened yesterday, after the central bank took steps to curb speculation. Since US debt was downgraded on August 5, the rupee has fallen about 17 percent, breaching 54 to the dollar on Thursday.
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