• search

RBI maintains vigil over asset price: Dr Rakesh Mohan

Written by: Staff
|

Mumbai, June 5 (UNI) The Reserve Bank of India (RBI) will maintain vigil over asset price rises, especially in housing and real estate, that are emerging as key areas of challenge, said its Deputy Governor Rakesh Mohan.

The apex bank was also watchful of consumer and business confidence, corporate performance, sizeable growth of reserve money and money supply, rising trade and current account deficits and the quality of credit growth, he said at the conference on Economic Policy in Asia at Stanford on Friday last.

''This risk sensitive approach has served us well in containing aggregate demand pressures and second round effects to an extent,'' Mr Mohan told the audience at the conference, which was organised by Stanford Center for International Development and Institute for Economic Policy Research at Stanford, USA.

''It has also ensured that constant vigil is maintained on threats to financial stability through a period when inflation was on the upturn and asset prices, especially in housing and real estate, are emerging as a challenge to monetary authorities worldwide.'' The Reserve Bank of India surprised markets in April by not raising the key short-term interest rate from 5.5 per cent when many expected a 25 basis points rise amid robust 8 per cent expansion, he said.

Leading up to the decision, it set a hawkish tone and warned that excessive increases in asset prices and credit had emerged as major challenges that could lead to financial instability, he said.

Loans by banks to the commercial sector had been growing at 30 per cent year-on-year, while money supply was expanding at an annualised 18 per cent, Mr Mohan pointed out.

When the policy rates had been raised, they were mainly aimed at reining inflation expectations amid pressures from high and volatile crude oil prices, he added.

UNI SN SSS AG2045

For Daily Alerts

For Breaking News from Oneindia
Get instant news updates throughout the day.

Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more