The Reserve Bank of India (RBI) on Tuesday slashed its key policy (repo) rate by 25 bps to 7.75% in its third quarter monetary policy. Repo is the rate at which banks borrow funds from the central bank. Consequently, the reverse repo rate too decreased to 6.75%. The measures were on expected lines.
At the same time, RBI cut the cash reserve ratio (CRR) or the portion of deposits banks keep with RBI, by 25 bps to 4.00%. This reduction will inject Rs 18,000 crore additional liquidity into the system.
"There is an increasing likelihood of inflation remaining rangebound around current levels going into 2013-14," Dr D Subbarao, governor, RBI said in the policy document.
"This provides space, albeit limited, for monetary policy to give greater emphasis to growth risks. The above policy guidance will, however, be conditioned by the evolving growth inflation dynamic and the management of risks from twin deficits."
"The decrease in the policy rate came after a gap of nine months. Last, RBI had "frontloaded" (read cut) the repo in April, 2012 by 50 bps. So far in 2012-13; the banking regulator trimmed CRR by 50 bps collectively. Through this latest policy action, RBI continued to strike a balance betweeen higher rate of inflation and growth moderation risks. It revised its growth forecast to 5.5% in 2012-13 as against 5.7% estimated earlier.
However, RBI sees some telltale signs of easing rate of inflation on account of non-food manufactured products. Although, the persisting food inflation may keep the rate range-bound.
"Keeping in view the expected moderation in non-food manufactured products inflation, domestic supply-demand balances and global trends in commodity prices, the baseline WPI inflation projection for March 2013 is revised downwards from 7.5% set out in the second quarter review to 6.8%," the governor said.
On system liquidity front, RBI so far resorted to two-pronged mechanism: CRR reduction and repeated open market operations through which it buys back government securities to pump in liquidity. RBI conducted five OMOs in between December 2012 and January 2013, which helped inject Rs 47,000 crore liquidity into the banking system.
"Despite these measures, the average net LAF borrowings at Rs 91,000 crore in January (up to January 27), were above the Reserve Bank's comfort level," he said.
RBI is comfortable with any liquidity level up to 1% of net demand and time liabilities (total deposits in the system) at Rs 65.39 lakh crore. Credit growth projection is retained at 16% in FY13.
According to the governor, the policy action is aimed at providing an appropriate interest rate environment to support growth as inflation risks moderate. Besides, containing the inflation coupled with a prudent liquidity management to ensure adequate credit flows are the two other parameters.
RBI's policy rate changes at a glance
Anda sedang membaca artikel tentang
Growth risks prompt RBI to cut repo, CRR by 25bps
Dengan url
https://kesehatanda.blogspot.com/2013/01/growth-risks-prompt-rbi-to-cut-repo-crr.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
Growth risks prompt RBI to cut repo, CRR by 25bps
namun jangan lupa untuk meletakkan link
Growth risks prompt RBI to cut repo, CRR by 25bps
sebagai sumbernya
0 komentar:
Posting Komentar