Tuesday, November 17, 2009

RBI Emphasizes on Managing the Economic Recovery, For Now :)

RBI emphasizes more on Managing economic Recovery


The Reserve Bank of India, country’’s Central bank, has said that managing economic recovery is now its focus area and the first phase of monetary tightening will arrest inflation without hurting growth.

RBI Executive Director Deepak Mohanty was found quoting  that at present, the focus around the world and also in India has shifted from managing the crisis to managing the recovery.

He said that withdrawing soft monetary policy, which was initiated to weather the financial crisis is the key challenge.

“The key challenge relates to the exit strategy that needs to be designed, considering that the recovery is as yet fragile but there is an uptick in inflation, though largely from the supply side, which could engender inflationary expectations,” he said.

Besides this, Mohanty said that the first phase of exit has been initiated by RBI in its monetary policy review in October 2009.

That was done mainly by withdrawal of unconventional measures taken during the crisis.

RBI, in its monetary review in October has raised the requirement for banks to hold portion of the deposits in cash, gold and government securities to 25 per cent.

Moreover, it had also done away with special liquidity provision for banks to provide money to mutual funds and others.

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