Highlights of mid-quarter review of India’s monetary policy

September 16th, 2010 - 2:17 pm ICT by IANS  

Mumbai, Sep 16 (IANS) Following are the highlights of the mid-quarter review of the monetary policy conducted by the Reserve Bank of India (RBI) Thursday, which focuses on reining in inflationary expectations in the economy.
-Repurchase rate or short-term lending rate hiked by 25 basis points to 6 percent

-Reverse repurchase or short-term borrowing rate raised by 50 basis points to 5 percent

-Policy rates such as cash reserve ratio and statutory liquidity ratio unchanged

-Inflation remains the dominant concern in macroeconomic management

-Prices of food articles still contributing to the inflationary pressures

-Recent monetary actions having impact on both inflationary expectations and demand

-Risk remains over firming of commodity prices and consequent inflationary pressures

-India’s economic growth of 8.8 percent in first quarter indicates recovery is consolidating

-High volatility in factory output growth past two months raises doubts over effectiveness of production index

-Growth prospects in agriculture have been boosted by monsoon

-All leading indicators of service sector activity point to sustained growth

-Risks on external front will clearly abate despite exports remaining sluggish

-Fiscal deficit seems conforming and target of 5.5 percent unlikely to be breached

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