RBI raises Interest Rates again

The Reserve Bank of India Governor Raghuram Rajan has presented his second monetary policy review today (29th October 2013 - Tuesday). In it he raised the Repo Rate, at which the central bank lends to banks by 25 basis points (bps) to 7.75 percent to fight stubbornly high inflation (earlier it was 7.50% which was continuing since  20th September 2013). He also slashed the Marginal Standing Facility (MSF) rate by 0.25 to 8.75 percent. He left the Cash Reserve Ratio (CRR) and statutory liquidity ratios unchanged at 4 percent and 23 percents respectively. Many things have changed over the last six weeks after his first review. The most important is the rupee’s movement against the dollar. The currency has pulled back about 10 percent from its life low of 68.80 against the greenback. Lets wait and the advantages this new changes will bring.