RBI Hikes CRR ( cash Reserve Ratio ) by 75 BPS to Control Liquidity

RBI ( Reserve bank of India ) took first step to control Inflation and reduce liquidity (cash ) from market. As this step RBI hikes CRR by 75 Basic Points . Market was expecting this to be about 50 BPS. This news did not surprise the market as it was a must needed step to control Inflation.

India is a fast recovering Economy and US President Barack Obama also said this few days ago. India and China are fastest growing economies. and US need to take steps in Outsourcing. They are planning to apply some tax on outsourcing.

Now CRR is 5.75% where it was 5% Previously. Good news is that no change in repo and reverse Repo Rates so Interest Rates will not increase at least till April, 2010.

Statement from all leading banks  are coming that they are not surprised by this hike and they were expecting something similar to happen.

Market also took this news positively and ended with green mark. RBI Governor D Subbarao also said in his Press Conference that  these are necessary steps for controling inflation and Liquidity from market (BSE and NSE).