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Rate rise will hurt growth, says FM

Rate rise will hurt growth, says FM
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First Published: Tue, Oct 25 2011. 01 33 PM IST

Updated: Tue, Oct 25 2011. 01 33 PM IST
New Delhi: The central bank’s latest round of interest rates increases will have some impact on growth, finance minister Pranab Mukherjee said on Tuesday, adding, he hoped the move will also help moderate inflation.
The Reserve Bank of India (RBI) raised its policy lending rate, the repo rate , by 25 basis points to 8.5% earlier on Tuesday, in line with expectations in a Reuters poll last week.
It was the 13th rate increase since early 2010, but the bank gave a strong signal it may be finished with the current tightening as growth slows. The RBI said it expected high inflation to ease starting in December.
The likelihood of a rate move at its December review is “relatively low,” the central bank said in a statement.
The RBI also revised down its growth forecast for the current fiscal year ending in March to 7.6%, from 8% with a downward bias earlier.
A jump in fuel and power prices drove the wholesale price index up 9.72% in September versus a year earlier, government data showed this month.
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First Published: Tue, Oct 25 2011. 01 33 PM IST