RBI's Credit Policy and The Inflation Rate

The Reserve Bank of India has not changed interest rates in its credit policy review. It was also anticipated that in order to contain the inflation the RBI may not change its interest rate. The interest rate is the main key that can contain inflation. The variation in the inflation will have direct impact on the inflation rate.

The inflation rate was at around 1.51 per cent on October 17. It indicates that the inflation is rising and in certain point of time it may come close to 2 per cent. It is obvious to be puzzled whether its will be good for economy.

The rising inflation is not at all affecting Indian Economy, as the inflation rate was at zero level for around six months. But the rise in the prices was still there, its very hard to find why there is deviation thus.

The change in the interest rate will also have impact on the liquidity of banks and ultimately it will effect the loans taken by banks from Central Bank and loans taken by individual from the banks. The economy is on the path of recovering from the the global recession and RBI's credit policy will be good measures to help the economy.