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Armaan · 10-08-07

Undoubtedly, the RBI has surprised the market by bringing a hike in Cash Reserve Ratio.

But the line that the policy has come off with flying colors seems apt as these monetary tightening measures will help in controlling robust demand conditions in the economy and will also help in easing asset price inflation. This, in turn, will be beneficial for curbing inflation further in the medium term.

And, the RBI is earnestly stepping up all its efforts to pare inflation (which in recent months has risen dramatically). This has forced it to bring stringent policies.

In the nearer term, the policy may have an adverse impact on overall economic growth, but, from a long term prospect, it will be beneficial for the economy.

The CRR hike has enhanced the RBI's ability to intervene in the currency market, as a higher CRR requirement automatically absorbs a part of the fresh rupee liquidity injected in the process of intervention.

Rather, the line has been said from the RBI's point if view.

10-08-07	#5
Armaan New Member Join Date: Oct 2006 Posts: 31 Thanks: 0 Thanked 0 Times in 0 Posts	Undoubtedly, the RBI has surprised the market by bringing a hike in Cash Reserve Ratio. But the line that the policy has come off with flying colors seems apt as these monetary tightening measures will help in controlling robust demand conditions in the economy and will also help in easing asset price inflation. This, in turn, will be beneficial for curbing inflation further in the medium term. And, the RBI is earnestly stepping up all its efforts to pare inflation (which in recent months has risen dramatically). This has forced it to bring stringent policies. In the nearer term, the policy may have an adverse impact on overall economic growth, but, from a long term prospect, it will be beneficial for the economy. The CRR hike has enhanced the RBI's ability to intervene in the currency market, as a higher CRR requirement automatically absorbs a part of the fresh rupee liquidity injected in the process of intervention. Rather, the line has been said from the RBI's point if view. Last edited by Armaan; 10-08-07 at 09:27 AM.