New Delhi, Sep 16 (ANI): Finance Minister Pranab Mukherjee on Friday noted that the Reserve Bank of India's recent 12th rate hike in the last 18 months has left an adverse impact on the overall impact of the country's economy.
"The RBI has announced a 25 basis point increase in the policy repo rate, raising it from 8 percent to 8.25. Accordingly, the reverse repo rate also goes up from 7 to 7.25. The government has chosen to reinforce its commitment to moderate inflation and take inflationary expectations in the face of some mixed data on the state of the economy," Mukherjee told media persons here.
The Reserve Bank of India lifted its policy-lending rate, called the repo rate, by 25 basis points to 8.25 percent, in line with expectations, as it persisted in a fight with inflation that has proven mostly futile.
On this aspect Mukherjee said that the central bank's monetary tightening is impacting the country's economic growth.
"Headline inflation continues to be a matter of concern at above 9 percent over the last 12 months, with significant demand and supply side factors contributing to it. There are also signs of growth being affected by monetary tightening in the recent data on the real economy," said Mukherjee.
"Today's take is consistent with the RBI's monetary stance for the first half of 2011-12 and the overall concerns on growth sustainability in the medium cap. I am hopeful that measures taken to get us back to a more comfortable situation earlier rather than later, while having scope to pickup in the second half of the year," he added.
Mukherjee had on Wednesday said the government and the Reserve Bank of India (RBI) will tackle the problem collectively
Headline inflation inched closer to the double-digit mark in August, rising to 9.78 per cent on the back of soaring prices of food and manufactured products. (ANI)
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