The Prime Minister’s Economic Advisory Council chairman, C Rangarajan, on Monday suggested that the Reserve Bank of India could reduce money supply and raise the interest rate to tame the rising prices of food articles.
With a substantial recovery from the slowdown expected in 2010, top bankers have said this could be translated into a healthy pick-up in credit growth, but may also result in a higher interest rate regime.
A meeting of India`s central bank Governor Duvvuri Subbarao with Finance Minister Pranab Mukherjee fuelled speculation on Friday that the bank may tighten monetary policy earlier than expected to stem rising prices.
The Reserve Bank of India (RBI) may raise its key policy rates by 25 basis points in January, earlier than previously thought, to tame accelerating inflation, Standard Chartered Bank said on Wednesday.
India Inc cautiously
welcomed the RBI`s move to modify the ECB guidelines and said
this also indicates a gradual withdrawal of stimulus measures
announced to help the industry tide over the global credit
crunch last year.
The rupee on Thursday depreciated by 10
paise to 46.63 a dollar in opening trade on fears that capital
inflows would be impacted adversely after the Reserve Bank
tightened the guidelines for external commercial borrowings.
The Reserve Bank on Wednesday changed the guidelines for external commercial borrowings (ECBs) for telecom companies by allowing them to use the fund raised abroad to participate in 3G spectrum auction but tightened the norms.
Amid surging retail prices
particularly of food items in India, the Reserve Bank today
said inflation in assets like real estate, bonds and stocks is
a bigger threat than the consumer price rise worldwide.
Amid speculations that RBI may buy
more gold from the IMF, the Prime minister`s economic advisory
panel has said the central bank should wait for some more time
before going for another round of purchases.