• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Mr P. Chidambaram

Our Bureau

New Delhi, Oct 30 The Finance Minister, Mr P Chidambaram, has said that the Reserve Bank of India’s move to raise the requirement for banks to keep cash with the central bank was intended to mop up excess liquidity from the system.

He also felt that this step cannot be construed as a signal on interest rates, implying that banks should not look at a hike in lending rates on account of the CRR hike.

“There is no signal (from RBI) on policy rates. RBI has maintained the status quo on policy rates. I hope banks will draw the correct message from the policy,” Mr Chidambaram told reporters here soon after the announcement of mid-term review of monetary policy for 2007-08.

Mr Chidambaram said that he expected the country’s gross domestic product (GDP) growth to be “slightly higher” than the level projected by the central bank. RBI has retained GDP growth forecast at 8.5 per cent for 2007-08, assuming no further escalation in international crude prices and barring domestic or external shocks.

On inflation, he said that the expectation was that it would be between 4.5 and 5 per cent in 2007-08. Mr Chidambaram highlighted that the RBI has pegged the medium term objective of inflation at three per cent. RBI on Tuesday said that inflation would be contained close to five per cent during 2007-08 while resolving to condition expectations in the range of 4-4.5 per cent.

On the question of whether monetary policy would help contain rising food and fuel prices, Mr Chidambaram said that food and fuel were not amenable to monetary policy changes and that they are more a function of demand and supply.

More Stories on : Monetary Policy | Interest Rates | Economy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
CRR hike: Auto index worst hit

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line