RBI declared its new policy and increased interest rate (repo rate) by 25basis point – this will increase the home loan and car loan interest rates. Despite of this hike RBI has assured that inflation will fall down.
How Will Inflation Fall
RBI has hiked interest rates (repo rate) 13times in 19months and every time there was an increase it was said that inflation would fall down. I don’t understand how the inflation will fall – when people would not have the money in hand and the commodity prices are on rise.
It will rather create a horrible situation in near future – when people will start selling their home – due to increased interest rates and non-payment of monthly home loan installments. That will be the time when real-estate bubble will burst and nothing could save it.
RBI assured this time that inflation will fall down in December 2011 – how untrue! The moment they said this – Sharad Pawar also issued a statement that ban on exports of sugar and onion will be abolished after diwali.
Master Stroke! Isn’t it?
As, exports are banned but sugar still costs around Rs.32/kg – so I do think every body can understand when exports open for sugar it will literally cross over Rs.40/kg. Same will be for onion.
Inflation is the bigger issue but I don’t seem to understand that no channel and no group are fighting against it. Rather all are up to Jan-lokpal to stop corruption and what about the inflation?