RBI ups repo, reverse repo rates by 0.25%

RBI ups repo, reverse repo rate by 25 bps

MUMBAI: The Reserve Bank today raised its key short-term lending and borrowing rates by 25 basis points each as part of its tight money policy to combat inflation, which the government feels is a cause of concern. ( Watch ) The repo and reverse rate (short-term rates at which RBI lends and borrows from banks) were hiked to 5 per cent and 3.5 per cent respectively and could make banks commercial lending dearer. "These measures should anchor inflationary expectations and contain inflation going forward," the Reserve Bank said a month ahead of the announcement of its annual monetary policy on April 20 for 2010-11. Finance Minister Pranab Mukherjee has expressed concern saying inflation is heading to double digits from to 9.89 per cent at present while at the same time not giving up on growth. "As liquidity in the banking system will remain adequate, credit expansion for sustaining the recovery will not be affected", RBI said.

India likely to witness 8.3% GDP growth in FY 11: Report

MUMBAI: India is likely to witness an 8.3 per cent GDP growth in FY 11 on the back of a strong investment and consumption demand, a report said.

"We expect GDP growth to be around 8.3 per cent during FY 11, backed by strong investment as well as consumption demand," Dun & Bradstreet India (D&B), Economy Outlook 2010-11, said.

The industrial sector is expected to play a crucial role in driving growth in GDP during FY 11, the report said.

The Index of Industrial Production (IIP) growth is expected to remain robust at 10.3 per cent during FY 11.

Focus on infrastructure spending by the Government and an increase in investment demand by corporates along with improved consumption would provide an impetus to industrial production, it said.

But the report anticipated fears about growing inflation at double-digit levels, which may pose a threat to growth prospects.

"Elevated commodity prices do remain a major concern and if unaddressed could pose a threat to the economic growth prospects," D&B India, Economic Analysis Head, Yashika Singh, said.

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RBI ups repo, reverse repo rates by 0.25%

Src: ET and Moneycontrol.com and Etc