Venkytalks

More info here

]http://www.indianrealestateforum.com/noida/t-budget-2010-10201.html[/URL]

ramkumar

http://economictimes.indiatimes.com/...ow/5703825.cms


what will be its effect?

good or bad?

was it necessity to increase the rates?

vsharma

Well by increasing the repo and reverse repo rates RBI wants to send a clear signal to the banks to increase their lending rates which will also help to curb inflationary pressures . With inflation galloping towards double digit mark some monetary tightening was expected . However a rate hike before monetary policy wasn't expected . However that will prove to be detrimental for realty and banking sector for the short term it would prove beneficial for them in the longer run since it saves the entire economy from getting into a viscious cycle . By increasing the reverse repo rates RBI is sending signals to the banks to park their excess money with RBI and earn a decent amount of interest on it . Thats another way to curb out excess liquidity from the system . However some monetary tightening can be further expected if inflation figures inches even further . However with food infaltion on a decline lets wait and watch as to how things are gonna pan out .

razer

Tough to call, but I think it's a good measure.