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'No case for any sharp adjustment in interest rates'

Our Bureau

New Delhi , July 23

THE Finance Minister, Mr P. Chidambaram, said on Tuesday that the current macroeconomic environment in the country does not call for any sharp adjustment in interest rates.

He also said that the Reserve Bank of India's policy stance in the first quarter review of Annual Statement on Monetary Policy for 2005-06 was in line with the thinking of the Government.

"At the moment, I don't think that there is a case for any sharp adjustment in interest rates", Mr Chidambaram told reporters when asked to comment on the RBI's move to leave both the bank rate and the reverse repo rate unchanged in its latest quarterly policy review.

The market was expecting the central bank to raise the reverse repurchase auction rate (reverse repo rate) by 25 basis points.

The reverse repo rate is the rate that RBI pays commercial banks to borrow overnight. The RBI has kept the reverse repo rate unchanged at 5 per cent.

The Finance Minister also said that the Government would ensure price stability and was keeping a close watch on inflation. "It (price stability) is always on the radar screen. Price stability is always the priority of the Government."

The RBI has also kept the inflation estimates for the current fiscal unchanged at 5-5.5 per cent.

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