RBI to continue its easy money exit plan

D-SubbaraoOn Wednesday, the Reserve Bank Governor, D Subbarao said that the apex bank is going to continue with its efforts to exit the easy money market. Also known as the monetary stimulus policy, the bank has shown its interest in moving away from it as soon as possible.

The recent hike in the key policy rates was a step ahead in this direction. This is being done, said the governor, because the bank wants to control the inflation and also ensure a high and sustainable growth.

Talking to the media, Subbarao said that if the bank doesn't increase the rates now, it will have to sacrifice growth in the long term since inflation will make the effects of growth null and void.

The RBI has hiked the repo and reverse repo rates by 0.25 per cent to make them 5 per cent and 3.5 per cent respectively. In January, the bank has already asked the banks to park their money with it for zero interest.

These measure, he said, have helped the bank in controlling the burgeoning inflation rate which is close to 10 per cent. He also said that the real estate prices have already reached their pre-crisis level.