The Reserve Bank may go in for further tightening of money supply as there is no likelihood of inflation coming to single digit in the next six months, according to indications given by the RBI governor to a parliamentary panel. Some more mon etary measures may be taken to contain the aggregate demand to counter inflation, said Mr Reddy to the members of the Parliamentary Standing Committee.
Mr Reddy admitted that there will be no easing of inflation in the next six months and it may go over 12 per cent. When some members asked why is inflation inching towards 12 per cent mark, while in countries like Britain it is below four per cent, Redd y replied that different countries have different yardsticks for measuring inflation.
Last month, the central bank has raised short-term lending rates for banks -- repo-- by 0.75 per cent in two instalments, while also increasing mandatory cash deposits of banks by 0.50 per cent in two phases to suck out excess liquidity. RBI is now slat ed to announce quarterly review of credit policy on 29th July, when it may announce further measures to absorb money supply.
For the week ended June 28, inflation rose to 11.89 per cent.
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