Business » Economy

Updated: December 11, 2013 17:03 IST

Monetary policy to focus on inflation, liquidity, says Rajan

  • PTI
Comment   ·   print   ·   T  T  
RBI Governor Raghuram Rajan at the Delhi Economics Conclave 2013 on Dec. 11, 2013. Photo: Ramesh Sharma.
Business Line
RBI Governor Raghuram Rajan at the Delhi Economics Conclave 2013 on Dec. 11, 2013. Photo: Ramesh Sharma.

With seven more days to go for the next monetary policy review, the Reserve Bank on Wednesday said it will focus on controlling inflation and roll back measures taken to check rupee volatility to improve liquidity.

“It (inflation) is proving very costly to our economy in terms of savings, in terms of investment. We need to bring inflation down.... No single data or point or number will determine our next move, but our effort is firmly on controlling inflation,” RBI Governor Raghuram Rajan said.

The Reserve Bank of India (RBI) hiked key interest rates by 0.25 per cent each in the last two reviews to tame inflation.

The next mid-quarterly policy review is scheduled for December 18.

Dr Rajan further said the central bank will take steps to improve liquidity situation, especially in the government securities (G-Sec) market.

“In the coming weeks, we will roll out more measures. We have rolled out some, such as interest rate futures but we will roll out more measures to improve the liquidity and depth of the G-sec market.

“In particular, we need to look at increasing liquidity across the spectrum of bonds that are traded not just for 10-year bonds.... We will also strengthen corporate debt market,” he said.

To check exchange rate volatility, the RBI had hike the MSF interest rates and eased norms for raising foreign funds by banks under the FCNR(B) scheme.

While the FCNR(B) scheme has ended, the interest rate on borrowing through the Marginal Standing facility (MSF), which is the overnight borrowing window of the RBI, is being lowered gradually.

While the wholesale price-based inflation (WPI) touched a 8-month high of 7 per cent in October, the retail-based inflation for the same entered double digits, 10.09 per cent.

The November retail inflation figures are scheduled to come out tomorrow and WPI figures on Monday.

More In: Economy | Business
This article is closed for comments.
Please Email the Editor

Commodity prices

Take a look at the prices of various commodities in Chennai here»



Recent Article in Economy

Indian companies’ foreign borrowing down by 77%: RBI

Indian companies raised over USD 727.33 million from overseas markets in April 2015, down 77.3 per cent from a year ago, according to RB... »