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Beating inflation: RBI may have to kill demand, hike rate, suck liquidity

  • calendar 12-May-2022
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Beating inflation: RBI may have to kill demand, hike rate, suck liquidity

Most of the risks to inflation are seen emerging from the crisis due to the Ukraine-Russia war. The repo rate – the rate at which the RBI lends to banks – was 5.15 per cent in February 2020 before the pandemic.With inflation seen as posing the “biggest threat” to the economy, the Reserve Bank of India (RBI) is looking at reversing all measures – liquidity infused and policy rate cuts – taken during the pandemic over the next 1-2 years, a source with knowledge of the development said. The Consumer Price Index or CPI-based inflation has been over 6 per cent for three straight months January-March 2022, and is expected to breach the 7 per cent mark in April.

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