RBI hikes interest rate

RBI hikes interest rate

Kamaraj IAS Academy | RBI hikes interest rate
  • August 4, 2018, 11:25 am

Why?

  1. To shore up the rupee and tackle inflation pressures in the world’s fastest-growing major economy.
  2. The RBI’s rate move follows emerging-market counterparts in Indonesia, the Philippines and elsewhere who are trying to counter currency routs and inflation risks triggered by a strong dollar and higher U.S. rates. The Federal Reserve left borrowing costs unchanged on Wednesday but stuck with a plan to gradually tighten policy in coming months.
  3. The economy is growing faster than any other major nation. But risks to the outlook are formidable: as the world’s fastest-growing oil consumer, higher crude prices will push up the current-account deficit, while global trade tensions threaten exports and investment.
  4. Inflation has been running well above the central bank’s medium-term target of 4 percent, with the outlook set to worsen because of oil prices and currency weakness.
Share