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CRR hike to lower inflation: PM, FM
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CRR hike to lower inflation: PM, FM
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[QUOTE=Admin;22]NEW DELHI: PM Manmohan Singh and FM P Chidambaram expressed confidence that inflation will come down after Reserve Bank's decision to hike Cash Reserve Ratio (CRR). "Let us hope so," PM said in response to a question on whether inflation would come down following measures taken to contain spiralling prices. Chidambaram, however, had a word of caution, saying miracles should not be expected on the price front. Pointing out that the Government does not have control over prices of imported items, he exuded confidence that international prices would moderate in the next few weeks. "I am confident that the international prices would also moderate in the next few weeks," he told reporters on the sidelines of a function to release commemorative coins on 1857 War of Independence. Chidambaram said the RBI's decision to hike CRR would suck out over Rs 18,000 crore, reducing liquidity to that extent. The Reserve Bank on Thursday had announced a 0.5% hike in CRR in two phases- first phase on April 26 and the second on May 10- to tame the soaring inflation that is hovering above 7%. CRR is the mandatory cash deposit that banks keep with the central bank at all times. "This (hike in CRR) will have a moderating effect on prices, but don't expect miracles. It will take some time. We must be patient. We must not lose our nerve," he said. Chidambaram said the RBI's decision is in conformity with his statement in Parliament that the Government has taken and the central bank will take monetary measures. "The RBI has consulted the government and it took a decision (to hike CRR)," he said. However, FM said it would take some time to control the soaring prices. "Don't jump to any conclusions. I have pointed out that we are a major importer of crude oil, urea, other fertilisers, palm oil, pulses and many metals. Global prices of these commodities have either doubled or trebled in the last nine months," FM said. Source: [url="http://timesofindia.indiatimes.com/Business/CRR_hike_to_lower_inflation_PM_FM/articleshow/2962575.cms"]http://timesofindia.indiatimes.com/Busi ... 962575.cms[/url][/QUOTE]
