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Raghuram Rajan maintains status quo on rates with inflation and high crude prices in mind

Reserve Bank of India (RBI) governor, Raghuram Rajan pauses during a news conference at the RBI headquarters in Mumbai on September 20, 2013. India's new central bank governor marked his first policy meeting on September 20 with a bold decision to hike interest rates, wrong-footing analysts and leading to sharp falls on the stock market. AFP PHOTO/ PUNIT PARANJPE

BJP leader Subramanian Swamy’s full-fledged attack on Governor Raghuram Rajan gave the Reserve Bank of India’s monetary policy announcement unprecedented attention. Swamy had alleged that Rajan was choking economic growth by refusing to slash interest rates in the initial months of his term.

RAGHURAM KEEPS EYE ON THE BALL

However, Rajan preferred to avoid playing to the gallery and kept his focus on controlling inflation, with the effect that he maintained a status quo in policy rates.

He believes a good monsoon and supply management will act as a counter to inflationary pressures.

The RBI retained the Repo Rate at 6.50 per cent on the back of higher food inflation and amid expectations of a rate action by the US Federal Reserve. Cash Reserve Ratio (CRR) has also been kept unchanged at 4 per cent.

This is in line with what most analysts had expected.

 

Source: India Today

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