Reserve Bank of India policy decsion

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The Reserve Bank of India (RBI) is attempting to balance the risk to growth to possible increase inflation in which it decided to leave its lending interest rate (repo rate) unchanged at 7.25% as well as its reserve ratio unchanged at 4%.  The RBI's move is in line with analysts' expectations.

Image courtesy Niyantha Shekar: http://www.everystockphoto.com/photographer.php?photographer_id=29059

In a statement the RBI said its previous tightening measures were made to support the rupee from unnecessary volatility in the currency markets and would be "rolled back in a calibrated manner" when rupee ( ICN , quote ) becomes stable once again.

Suggestions from RBI to the Indian government to begin to implement reforms in an effort to reduce the country's account deficit.  The government's account deficit is the key factor in rupee's weakness.

One other key data element from the RBI's statement surrounds the India's growth forecast.  The RBI is citing insistent weakness in the country's industrial industries and weak global growth causing the central bank to reduce its forecast by 0.2% for the year ending March 31, 2014 from 5.7% to 5.5%





The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , International , Stocks

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