India moves to curb inflation |
http://www.sina.com.cn 2004/09/13 15:10 Shanghai Daily |
India's central bank has increased the amount of cash lenders have to keep with it to curb inflation which is running at a three-and-a-half year high. The Reserve Bank of India increased the cash reserve ratio by a quarter to 4.75 percent on Saturday, which will come into effect from September 18. The amount will go to 5 percent of deposits starting from October 2, the central bank said in from Mumbai. Wholesale prices rose 8.33 percent in the week ended August 28, from 8.17 percent in the previous week. The figure was more than the median estimate of 8.16 percent. Inflation is at its highest since February 2001. Surplus funds with banks is one of the reasons why inflation increased more than the central bank expected. A reduction in surplus funds with banks may reduce consumer demand, by forcing banks to raise interest rates, helping slow inflation. In its last review of monetary policy on May 18, the central bank expected inflation to be "around 5 percent" by the end of the next financial year. Bonds had their largest drop in a week on concern lenders, the largest buyers of government debt, will have less cash. The yield on the benchmark 7.37 percent bond due 2014 rose 12 basis points to 6.06 percent. A basis point is 0.01 percentage point. This was the bond's biggest drop since September 3. The central bank's "medium-term objective of reducing the cash reserve ratio to its statutory minimum of 3 percent, while retaining the option of using the cash reserve ratio in both directions for liquidity management." The Reserve Bank will pay an interest of 3.5 percent from September 18 on the deposits, less than the 6 percent it pays now. (Bloomberg News) 编辑:趴趴 |
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