Indian middle class is shuddering under the fear of central bank. The revised monetary policy has left the middle class confused. ICICI Bank which holds thirty percent of retail lending in the country raised the interest rate on all its floating rate loans and now the interest rate stands at 12.75%. This is surely expected to cool the demand in the market and adversaly affect the home finance market costs.
The RBI has seen three increases in CRR in the past four months and this can’t be labeled as a good monetary policy since it has caused the long terms rates to move up so drastically. On one hand the government is giving tax exemptions and on the other hand is punishing it with increasing rates.
The central bank could have opted for other means for for cooling the credit growth rather than punishing the middle class which cannot digest such volatile changes. Had a better co-ordination been maintained between the monetary and fiscal policy it would have not pinched the Indian middleclass much.
Via indiatimes
