RBI could extend incremental CRR to rein in liquidity

RBI could extend incremental CRR to rein in liquidity

• By Staff Writer

The Reserve Bank of India (RBI) may extend the temporary incremental cash reserve ratio (CRR) it imposed on banks last week as the monetary authority is seen training its sights on liquidity management to tackle inflation rather than lifting benchmark policy rates to tame wild jumps in food prices. Consumer Price Index (CPI) inflation surged to 7.44% year-on-year in July from 4.87% in the previous month, driven primarily by high vegetable prices. The RBI’s target for CPI inflation is 4%, while its tolerance band is 2-6%.