This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/go/rss/int/news/-/news/business-16695440
The article has changed 4 times. There is an RSS feed of changes available.
| Version 2 | Version 3 |
|---|---|
| India bank holds interest rates but boosts liquidity | India bank holds interest rates but boosts liquidity |
| (about 2 hours later) | |
| India's central bank has left interest rates unchanged but moved to increase liquidity as it battles high inflation and the prospect of weaker growth. | India's central bank has left interest rates unchanged but moved to increase liquidity as it battles high inflation and the prospect of weaker growth. |
| The Reserve Bank of India (RBI) pointed to the government's "policy and administrative uncertainty" as one of the reasons for the economic problems. | The Reserve Bank of India (RBI) pointed to the government's "policy and administrative uncertainty" as one of the reasons for the economic problems. |
| It earlier cut its prediction for economic growth for the financial year to March from 7.6% to 7%. | It earlier cut its prediction for economic growth for the financial year to March from 7.6% to 7%. |
| The bank has raised benchmark rates 13 times since March 2010 to curb prices. | The bank has raised benchmark rates 13 times since March 2010 to curb prices. |
| Inflation rose at 7.47% in December which, despite being a two-year low, is still well above government targets. | Inflation rose at 7.47% in December which, despite being a two-year low, is still well above government targets. |
| Growth concern | Growth concern |
| The RBI confirmed after its review meeting it was leaving the repo rate, at which it lends to commercial banks, at 8.5%. | |
| In response, the main Sensex share index rose 1.5% by mid-afternoon. | |
| In a strongly worded statement, the RBI said: "The global environment is only partly responsible for the weak industrial performance and sluggish investment activity. | In a strongly worded statement, the RBI said: "The global environment is only partly responsible for the weak industrial performance and sluggish investment activity. |
| "Several domestic factors - the unhealthy fiscal situation, high interest rates and policy and administrative uncertainty - are also playing a role.'' | "Several domestic factors - the unhealthy fiscal situation, high interest rates and policy and administrative uncertainty - are also playing a role.'' |
| It added: "Policy and administrative actions, which induce investment that will help alleviate supply constraints in food and infrastructure, are critical. | It added: "Policy and administrative actions, which induce investment that will help alleviate supply constraints in food and infrastructure, are critical. |
| "In the absence of credible fiscal consolidation, the Reserve Bank will be constrained from lowering the policy rate in response to decelerating private consumption and investment spending." | "In the absence of credible fiscal consolidation, the Reserve Bank will be constrained from lowering the policy rate in response to decelerating private consumption and investment spending." |
| The bank announced a 50 basis point cut in banks' cash reserve ratio. This reduces the amount of money they are required to hold and is intended to stimulate lending. | The bank announced a 50 basis point cut in banks' cash reserve ratio. This reduces the amount of money they are required to hold and is intended to stimulate lending. |
| As much as 320bn rupees ($6.4bn) could be released into the banking system. | As much as 320bn rupees ($6.4bn) could be released into the banking system. |
| The bank said it remained confident inflation would ease to 7% by March. | The bank said it remained confident inflation would ease to 7% by March. |
| ING Vysya Bank economist Upasna Bhardwaj told Associated Press that the moves were largely expected but that the RBI's hands were tied on the supply side. | ING Vysya Bank economist Upasna Bhardwaj told Associated Press that the moves were largely expected but that the RBI's hands were tied on the supply side. |
| "The government has to do something,'' she said. "Huge fiscal expenditures are adding to the inflation scenario.'' | "The government has to do something,'' she said. "Huge fiscal expenditures are adding to the inflation scenario.'' |
| In its earlier report, the RBI said that domestic growth had been hit by a number of factors. | In its earlier report, the RBI said that domestic growth had been hit by a number of factors. |
| "With growth decelerating even in emerging and developing economies, the spillovers from the euro area are likely to pull down global growth." | "With growth decelerating even in emerging and developing economies, the spillovers from the euro area are likely to pull down global growth." |