Highlights of third quarter review of monetary policy
January 25th, 2011 - 2:17 pm ICT by IANSNew Delhi, Jan 25 (IANS) The Reserve Bank of India Tuesday hiked its short-term lending and borrowing rates by 25 basis points in its third quarter review of monetary policy 2010-11. Following are the highlights of the document:– Repo rate raised by 25 basis points to 6.5 percent
– Reverse repo rate hiked by 25 basis points to 5.5 percent
– Cash reserve ratio retained at 6 percent
– Bank Rate retained at 6 percent
– Raises fiscal-end inflation projection to 7 percent from 5.5 percent earlier
– Projection of gross domestic growth retained at 8.5 percent with an upward bias
– Looking beyond 2010-11, GDP growth rate may decline somewhat as agriculture reverts to its trend (assuming a normal monsoon)
– Structural demand-supply mismatches in several non-cereal food items such as pulses, oilseeds, eggs, fish and meat likely to keep food inflation high
– Hike in rates expected to contain the spill-over from rise in food and fuel prices to generalised inflation
– Rate hike moderate enough not to disrupt growth
– Will continue to provide comfort to banks in their liquidity management operations
– Current growth and inflation trends warrant persistence with the anti-inflationary monetary stance
– Next mid-quarter review of monetary policy for 2010-11 will be announced through a press release on March 17
– Monetary policy for 2011-12 will be announced on May 3
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Tags: bank of india, basis points, cash reserve ratio, cereal food, food and fuel, food items, fuel prices, gdp growth rate, inflation rate, liquidity management, management operations, march 17, monetary policy, monetary stance, oilseeds, persistence, rate hike, reserve bank of india, reverse repo, upward bias