Rbi Monetary Policy Review of 2011-2013.

Topics: Monetary policy, Inflation, Central bank Pages: 4 (1270 words) Published: July 3, 2013
Monetary policy 2012-2013
* Reduce the repo rate under the liquidity adjustment facility (LAF) by 50 basis points from 8.5 per cent to 8.0 per cent with immediate effect. * The reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands adjusted to 7.0 per cent with immediate effect. * Raise the borrowing limit of scheduled commercial banks under the marginal standing facility (MSF) from 1 per cent to 2 per cent of their net demand and time liabilities (NDTL) outstanding at the end of second preceding fortnight with immediate effect. * Reduce the repo rate under the liquidity adjustment facility (LAF) by 50 basis points from 8.5 per cent to 8.0 per cent with immediate effect. * The reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands adjusted to 7.0 per cent with immediate effect. * Raise the borrowing limit of scheduled commercial banks under the marginal standing facility (MSF) from 1 per cent to 2 per cent of their net demand and time liabilities (NDTL) outstanding at the end of second preceding fortnight with immediate effect. * The MSF rate, determined with a spread of 100 basis points above the repo rate, stands adjusted to 9.0 per cent with immediate effect * The Bank Rate stands adjusted to 9.0 per cent with immediate effect * The cash reserve ratio (CRR) of scheduled banks has been retained at 4.75 per cent of their NDTL. * The policy actions taken are expected to:

* Stabilize growth around its current post-crisis trend; * Contain risks of inflation and inflation expectations re-surging; and * Enhance the liquidity cushion available to the system.

Projections:
* The advance estimate of the GDP growth of 6.9 per cent for 2011-12 by the Central Statistics Office (CSO) is close to the Reserve Bank’s baseline projection of 7.0 per cent. * Going forward into 2012-13, assuming a normal monsoon, agricultural...
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