Rates Hike is likely To Curb the Inflation

By | September 23, 2011

A recent press report said that the Reserve Bank of India’s hike in the interest rates will depend upon the inflation persistence. Dr. Subir Gokran the Deputy Governor Reserve Bank of India told the press that the if central Bank raises the interest rate and it is not the end in itself, if the problem exists for a long time the it will raise the interest rate. And in contrast if the situation is simplified then there is a positive change in the interest rate.

Dr. Gokran said the main factor for the inflation is raise in the income levels, and secondly the influence of Politics is not that much effective over this problem. As a result these factors act as the inducing powers in increasing the tolerance limit of inflation.

In Earlier Days the increase in the inflation 8-9% creates the political issue; the voice has been raised against it but only up to certain extent, because the first factor has more impact on this issue.

The Central Bank increased the Repo rate 12 times and also the basis point cumulatively to reduce the inflationary pressure. The rate hikes favour for the inflation and it acquires the prominent place. It is well seen in the Whole Sale Price Index inflation which exists above 9% for nine months uninterruptedly.   The continuous hike has made home loan, car loans, personal loans etc more expensive.

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About Pradeep Yuvaraj

Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance. He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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