Inflation is continuing to show its dark faces. Reserve Bank of India again hiked its Repo Rate which now stands at 8.25%. Repo Rate is the rate in which bank's borrow money from RBI. Hence a hike in this rate will definitely affect the Banks.However experts are of the view that the hike will not affect the business of Banks. Most of the Banks stated that they will not increase the lending rates. But there is always a possibility of hike in interest rates for advances by Banks which will affect the people. Loans will become costlier.RBI is of the view that inflation figure is a big matter of concern and that a rate hike was always in the picture. The rate hike was on the basis of current macroeconomic assessment. The previous rate was 8% and this change is made with immediate effect. Department of Communication of RBI said in a Press Release on 16.09.2011. Crude oil prices remaining high, food inflation etc are key factors.
Finance Minister said in a press meeting that the rate hike by RBI will hopefully help the measures to bring down inflation. Inflation has almost touched double digit. Wholesale Price Index is 9.8 as on August 2011. Although India's exports have sustained several setbacks in Global economy in the present times, it is very difficult to continue as the Global scenario has worsened much more.
RBI is confident that the present hike will contain inflation as it has done in the past.
The present rates of RBI are as follows:
Repo Rate - 8.25%
Reverse Repo Rate-7.25%
Bank Rate-6%
Cash Reserve Ratio-6%
Statutory Liquidity Ratio-24%
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