Indian Interest Rates Stay The Same, Reports WSJ
October 28, 2009 10:52 AM
Wall Street Journal reports that the Reserve Bank Of India, India’s Central Bank, did not hike interest rates. While many expected the bank to hike the rates, it did not bite the bullet. This was despite the bank's own inflation forecast. The forecast expects inflation to be 6.5% for the year ended March 2010. This was much below the 7 – 8% inflation rates forecast by economists.
According to WSJ, deficit monsoon reduced farm productivity. So, food prices are expected to rise. Crude is already on the boil. During the global financial crisis, RBI has cut interest rates by more than 4 percentage points. This RBI stance helps the political establishment. India’s Finance Ministry is against rate increases as it has a huge fund raising program. WSJ feels that if RBI does not hike the interest rates, then, the common Indian consumer is in for a lot of hardship.
