The Reserve Bank of India (RBI) will continue on its path of the monetary policy tightening measures and interest rates will go up in the coming months, according to the statement made by deputy governor Subir Gokarn. This is likely to make personal loans more expensive.
When asked if the central bank will stop interest rate hikes due to the euro-zone crisis and the absence of clarity on the arrival of the monsoon, Gokarn sais that a “stop-go” sequence gives the mixed signals.
Gokarn said, “The ideal situation when you are maintaining a trajectory is to take it to its logical conclusion. But this has to be done in a way that doesn’t put you in a situation where you might have to reverse your action without having completed the task, or stop in the middle”.
The deputy governor added that though the Reserve Bank of India’s steps are in line with the speeding up of non-food manufacturing inflation, it also has to keep sufficient liquidity for the big government borrowing programme and increasing credit demand.