Millennium Post
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Bankers hail Raghuram’s strategy to keep rates same

Bankers on Wednesday welcomed the Reserve Bank's move to keep key policy rates on hold saying it will help recovery and macroeconomic stability.

‘The decision to keep policy rates unchanged is welcome in view of continued risks to growth and keeping in mind the possibility of softening in food inflation and the lagged effect of earlier rate increases,’ ICICI Bank Manging Director and Chief Executive Chanda Kochhar said.

Most market participants were expecting a minimum 0.25 per cent rate hike after November wholesale price index (WPI) based inflation rose to 14-month high of 7.52 per cent while CPI accelerated to 11.24 per cent. State Bank of India chairperson Arundhati Bhattacharya said: ‘It really hurts the depositors and we would not like to do that. Our rates are still higher than what it was on 15 July, I see no immediate response toward rate cut.’ In view of the fact that liquidity is ample in the system, we will definitely be looking at the rates and we will try to see if something needs to be done...may be for the bulk (depositors) we might look at doing something, she said.

Kochhar said considering the current macroeconomic situation, the RBI’s commitment to managing adequate systemic liquidity and its balanced approach to growth and inflation should be seen as positives for economic recovery and stability. The RBI in the policy said while CPI and WPI inflation, excluding food and fuel have been stable, despite a steady increase in administered prices of fuel towards market levels, the high level of CPI inflation, excluding food and fuel, leave no room for complacency.
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