A recent press report said that the Reserve Bank of India would not give up hiking the interest rates until the inflation comes down to the desirable limit. According to Dr. D.Subbarao, the Governor of the RBI, the poor people are being affected by the inflation. Hence, until the inflation rate comes down the interest rates would not be reduced.
Mr. Subir Gokaran, the Deputy Governor of the RBI said that only to a certain basis the rates can be raised but once the persisting problems starts relieving then the rate hikes would be stopped.
However representatives from various sectors such as banking, brokerages and corporate have insisted on stopping the rate hikes as it leads to a slowdown in growth of the economy due slowdown to the global economy. The rate hike has slowed down the loan business of banks as interest rates of home loan and other retail loans have gone up progressively.
The factory output which was estimated to be at 4.7 per cent year-on-year rose only to 4.1 per cent in August. Thus, the industrial production has thereby gone down by 0.3 per cent month-on-month. The central bank has anticipated that moderation in growth would help to bring down inflation. Mr. Gokaran also said that controlling inflation remains one of the most important items in the agenda of RBI. Moderation in the growth could help in curbing inflation.