Increase in repo rate to curb inflation: MoS Finance

New Delhi, Nov 1 (UNI) Reserve Bank of India's (RBI) decision to increase the short-term repo rate was aimed at controlling inflation and managing liquidity, Minister of State for Finance Pawan Kumar Basal said today.

''The repo rate was increased to control the inflation and to make banks self dependent so that they don't have to take loans from the central bank,'' he told reporters here.

The move was not to make bank loans expensive, he added.

RBI had yesterday raised the short-term repo rate to 7.25 per cent from the earlier 7 per cent.

The central bank kept reverse repo rate, bank rate and cash reserve ratio unchanged at previous levels.

RBI Governor Y V Reddy had said the central bank would deploy various monetary policy instruments to curb inflationary expectations.

''There are demand pressures in the economy emanating from the robust manufacturing growth and other sectors of the economy doing well. This will put pressure, particularly on the manufactured goods. The RBI will ensure that inflationary prices are kept under check,'' Dr Reddy said through a Video Conference on the Mid Term Review of Annual Policy Statement 2006-07.

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