"Global cues calls for India's monetary policy to be pre-emptive"

Mumbai, July 25 (UNI) The Reserve Bank of India(RBI) Governor Dr Y V Reddy today justified the hike in the repo rates as a pre-emptive move to contain inflation.

Addressing a press conference here today, Dr Reddy said ''the current situation in the country calls for some stabilising influences.'' Replying to a question, Dr Reddy said ''for the time being, bank rate has not been changed as we at the RBI felt the circumstances in the country are still extraordinary.'' Stating that India must be prepared for global developments, the RBI Governor said, ''given the global cues, India's monetary policy should be pre-emptive.'' He also reasoned,''it is better to act now than to wait to assess the extent of uncertainty.'' To contain inflation, Dr Reddy called for some appropriate priority in the policy responses ensuring a monetary and interest rate environment that enables continuation of the growth momentum.

For that banks must improve their deposit mobilisation and also maintain improvement in the credit quality, he said.

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