Mumbai, Jan 24 (IANS) The following are the highlights of the third quarter review of the monetary policy unveiled by the Reserve Bank of India Tuesday:
– Cash reserve ratio lowered by 50 basis points to 5.5 percent from 6 percent
– This step will release Rs.320 billion into the system
– Reduction can be viewed as a reinforcement of the guidance that future rate actions will be towards lowering them
– Repurchase rate, or short-term lending rate, retained at 8.5 percent
– Reverse repurchase rate, or short-term borrowing rate, stands at 7.5 percent
– Bank rate untouched at 6 percent
– Growth slowing due to uncertain global environment, cumulative impact of past monetary policy tightening and domestic policy uncertainties
– Projection on growth lowered to 7 percent from 7.6 percent for current fiscal
– Moderation in inflation reflects sharp deceleration in prices of seasonal food items
– Inflation in protein-based food items and non-food manufactured products still high
– Upside risks to inflation arise from global crude oil prices, rupee depreciation and slippage in fiscal deficit
– Inflation projected to moderate to 7 percent by March-end
– Intention to maintain interest rate environment that moderates inflation
– Policy also tuned to manage risk of falling growth
– Measures intended to manage liquidity to ensure it remains in moderate deficit, consistent with effective monetary transmission
– Forthcoming budget should concentrate on fiscal consolidation
– Administrative actions should induce investment for alleviating supply constraints in food, infrastructure
– Next mid-quarter review of monetary policy March 15
– Monetary policy for 2012-13 will be on April 17