.......The RBI puts the onus squarely on the government for the rising inflation in the economy, saying that it is due to supply side constraints and the fiscal deficit caused by the rising subsidy burden but can do nothing about it. And it does not bring down the interest rates fearing that it would fuel inflation and tinkers with the monetary policy by reducing the SLR, when the banks needed reduction in CRR to shore up their profits. RBI expects the banks to reduce their lending rates without any corresponding reduction either in repo rate or CRR. This amounts to punishing the banks for the inaction of the government......
Read - Moneylife
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