Today, 24th January 2012 the Reserve Bank of India (RBI) left the interest rates unchanged but cut the cash reserve ratio (CRR) for banks by 50 basis points. This movie of cut in CRR will ease the liquidity in the banking system.

Todays cut lowers the CRR to 5.50 percent from 6.00 percent. This move will release 320 billion rupees of liquidity into the banking system.

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With inflation still hovering above 7.0 percent, RBI left the Repo Rate unchanged at 8.50 percent.

“The growth-inflation balance of the monetary policy stance has now shifted to growth, while at the same time ensuring that inflationary pressures remain contained,” RBI governor Duvvuri Subbarao said in his policy statement.

RBI lowered its GDP growth forecast for the fiscal year that ends in March to 7 percent from 7.6 percent. It also left its wholesale price index inflation target unchanged at 7 percent for the end of the fiscal year in March.