With bankers and industry crying foul over RBI steps to squeeze liquidity to arrest rupee fall, RBI governor D Subbarao on Friday met Prime Minister Manmohan Singh and finance minister P Chidambaram in the run up to the first quarter policy review.
The meetings assume importance in the backdrop of RBI taking a series of measures to tighten liquidity and check gold imports with a view to rescuing rupee. Singh, in his address to India Inc last week, had said that the measures taken by RBI to tighten liquidity in the system were temporary and would be reversed with volatility in the forex market subsiding. Chidambaram too had tried to calm the industry by suggesting that the liquidity tightening measures were temporary in nature and do not signal firming up of interest rates in the long-term.
In its first quarterly review of monetary policy on July 30, RBI will have to take a call on rolling back the measures in addition to readjusting interest rates to prop up sagging economic growth.