Case 2 Inflation

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Unformatted text preview: The reason put forward was the RBIs decision of not reducing the CRR or the Bank rate. A cut of even 1% in the CRR amounts to Rs 7000 crore of inflow. The RBIs policy seemed to be precautionary step of not allowing excess liquidity in the economy, which could fuel inflationary pressures already being built up as a result of the hike in international crude oil prices. Worse, if the access liquidity spilled over to the forex market, it could further depreciate the already devalued rupee. The message was, even if there is an industrial slowdown, inflation and depreciation are unaffordable even if it means a tight credit policy....
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This document was uploaded on 02/22/2014.

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