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- No no .. it s about the cut in interest rates on deposits .. it s nt associated with real estate .. its nt cut in loan ratesCommentQuote0Flag
- Hi!:)it s about the cut in interest rates on deposits .. it s nt associated with real estate
I'm sorry but I don't agree with the above statement as Arvind is not talking about real estate here. He has simply diverted our attention towards the results of the latest credit policy issued by The Reserve Bank of India. And he is right! the policy really seems to be successful as desired by the authority.CommentQuote0Flag
- I disagree Armaan .. it is saying that RBI's credit policy is coming off with flying colors .. hike in CRR sucks money from markets .. if banks r cutting deposit rates it s nt good for common public .. then hw can u take it positively ..??CommentQuote0Flag
- 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.CommentQuote0Flag
- Absolutely right!!!
Yeah you are absolutely on the right path now Armaan. Mixing up macro and micro economics becomes ridiculous, just like mixing cut in fixed deposit rates with inflation cut..:)
Cut in deposit rates is a result of liquidity tightening measures of RBI policy.
Since the banks have to keep more reserves with themselves they need to cut deposit rates offered to the holders to balance the equation.
Now people like you and me will get lesser amount of interest than earlier!!!
Also, cut in deposit rates does not have any direct concern with inflation-curbing, except for the fact that RBI sucked money from the markets to cut down the same through the channel of banking industry.
Perhaps, Yash was not comfortable with the treatment of news item taken from somewhere.
Well this way we had some hot debate over a subject !!!:)CommentQuote0Flag
- Thread more..
Let's escalate further on the identical difference:
Hike in CRR >> Banks need to keep more reserves >> Less funds to generate income >> Pressure on bank income >> Bank’s action >> Cut in deposit rates..
Hike in CRR >> Banks need to keep more reserves >> Money lending measures tighten >> Liquidity in markets goes down >> Value of money increases in the economy >> Inflation tends to go down..
Any reactions ..??CommentQuote0Flag
- Yes, that makes a lot of sense, Vikram! Thanks for simplifying this apparently very complex issue!:)CommentQuote0Flag