Reserve Bank of India (RBI) in its June mid-quarter monetary policy today, left its key policy (repo) rate unchanged at 7.25 percent in line.
Cash reserve ratio (CRR) remained at 4 percent. Repo is the rate at which banks borrow from the Central bank. CRR is the portion of deposits that banks are mandated to keep with RBI.
Thus, the reverse repo rate will remain unchanged at 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.25 per cent.
Central bank said that the above monetary policy stance has been informed by the evolving growth-inflation dynamic, the balance of risks as well as recent developments in the external sector.
In view of the global economic activity has slowed and risks remain elevated on account of uncertainty over policies of systemic central banks.
On the domestic front, the RBI said that macro-economic conditions remain weak, due to infrastructure bottlenecks, supply constraints, lacklustre domestic demand and subdued investment sentiment.
RBI bank said that inflation has moderated as projected. It said that fall in rupee; external sector risks and elevated food inflation are areas of concern.
RBI said that the progress of monsoon so far seems to be positive for growth. RBI said a moderation in gold imports could be underway in June.
The Central Bank has said that balance of payments, inflation and growth rate will determine its future monetary stance. It further said that only a durable receding of inflation will open up the space for monetary policy to continue to address risks to growth.
Cash reserve ratio (CRR) remained at 4 percent. Repo is the rate at which banks borrow from the Central bank. CRR is the portion of deposits that banks are mandated to keep with RBI.
Thus, the reverse repo rate will remain unchanged at 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.25 per cent.
Central bank said that the above monetary policy stance has been informed by the evolving growth-inflation dynamic, the balance of risks as well as recent developments in the external sector.
In view of the global economic activity has slowed and risks remain elevated on account of uncertainty over policies of systemic central banks.
On the domestic front, the RBI said that macro-economic conditions remain weak, due to infrastructure bottlenecks, supply constraints, lacklustre domestic demand and subdued investment sentiment.
RBI bank said that inflation has moderated as projected. It said that fall in rupee; external sector risks and elevated food inflation are areas of concern.
RBI said that the progress of monsoon so far seems to be positive for growth. RBI said a moderation in gold imports could be underway in June.
The Central Bank has said that balance of payments, inflation and growth rate will determine its future monetary stance. It further said that only a durable receding of inflation will open up the space for monetary policy to continue to address risks to growth.
RBI further said that although several measures have been taken to contain the current account deficit, there is a need to be vigilant about the global uncertainty, the rapid shift in risk perceptions and its impact on capital flows.
Further said that the Reserve Bank stands ready to use all available instruments and measures to respond rapidly and appropriately to any adverse development.
Mid Quarter Monetary Policy Update
June 17, 2013
§ Policy repo rate under the liquidity adjustment facility (LAF) has been kept unchanged at 7.25% with immediate effect.
§ CRR of scheduled banks has been kept unchanged at 4% of their net demand and time liabilities (NDTL)
§ The reverse repo rate under the LAF will remain unchanged at 6.25%
§ The marginal standing facility (MSF) rate and the Bank Rate at 8.25%.
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