Union Finance Minister Pranab Mukherjee has appreciated the monetary policy tightening announced by Reserve Bank of India(RBI) in its mid quarterly policy review today. He welcomed the RBI’s decision to raise the repo rate by 25 basis points and Reverse Repo Rate by 50 basis points. The Finance Minister expressed his happiness that the RBI has decided not to tighten the CRR from the existing 6 percent. The narrowing of LAF corridor should contribute towards a more efficient monetary policy, the Finance Minister added. He said that this should also encourage a greater absorption of liquidity by the Central Bank and contribute to further control of inflation.
Mr Mukherjee further said that the food price inflation is on a long run downward trend but still running high. The Finance Minister said that the global wheat production downfall is creating some speculative pressure. He said that RBI’s policy changes should also help us navigate this situation more effectively. The Finance Minister expressed his happiness that the RBI has made a mid quarterly decision which enables it to take small measures which do not jolt the markets beside giving a good signal for inflation control and leave India’s remarkable growth story unaltered.