Today, July 31, 2012, India’s Central Bank, the Reserve Bank of India (RBI) kept the key policy rates unchanged for the second time since June this year, saying lowering them would raise the inflationary pressure.
Find below the key highlights of the ‘First Quarter Review of Monetary Policy 2012-13′, announced by the Reserve Bank today:
RBI Policy Measures :
- RBI left the Repo Rate unchanged at 8 percent.
- RBI left the Reverse Repo Rate unchanged at 7 percent.
- RBI left the Cash Reserve Ratio (CRR) unchanged at 4.5 percent.
- RBI cut the Statutory Liquidity Ratio (SLR) from 24 percent to 23 percent, effective August 11.
RBI Policy Stance :
- Lowering the policy rates right now would only raise the inflationary pressure without necessarily stimulating the growth.
- Primary focus of monetary policy remains inflation control.
- Decline in non-food manufactured inflation not commensurate with growth moderation.
- RBI will respond to liquidity pressures including by way of open market operations.
Forecast :
- Growth projection for 2012 – 2013 lowered to 6.5 percent from 7.3 percent.
- WPI Inflation projection for March 2013 raised to 7 percent from 6.5 percent.
Other Highlights :
- Situation in the euro area continues to cause concern.
- Asks government to cut fertiliser and fuel subsidy.
- Open market operations to continue to inject liquidity.
Mid-Quarter Monetary Policy Review on 17th September 2012 whereas Second Quarter policy review on 30th October 2012.
Statement by Dr. D. Subbarao, Governor, Reserve Bank of India on the First Quarter Review of Monetary Policy for the Year 2012-13