Highlights of RBI monetary policy review

Highlights of RBI monetary policy review

 The Reserve Bank of India (RBI) left interest rates unchanged for the second time since June, in line with expectations, while cutting its growth forecast and lifting its inflation outlook as economic conditions deteriorate.

The RBI kept its policy repo rate at 8% and left the cash reserve ratio for banks at 4.75%. CRR is the share of deposits banks must keep with the RBI.

"In the current circumstances, lowering policy rates will only aggravate inflationary impulses without necessarily stimulating growth," RBI Governor Duvvuri Subbarao wrote in the monetary policy review, adding the central bank's primary focus remains inflation control.

RBI keeps policy rates unchanged, SLR cut to 23% 

A Reuters poll of 20 economists last week showed all but one expected the RBI to hold rates steady.

Following are highlights from the monetary policy statement and comments from top central bank officials:

POLICY MEASURES:

* Keeps repo rate unchanged at 8%.

* Reverse repo stays at 7%.

* Cash reserve ratio stays at 4.5%.

* Statutory Liquidity Ratio cut to 23% of deposits from 24%, effective August 11.

POLICY STANCE:

* Lowering policy rates now would only aggravate inflationary impulses without necessarily stimulating growth.

* Primary focus of monetary policy remains inflation control.

* Decline in non-food manufactured inflation not commensurate with growth moderation.

* Will respond to liquidity pressures including by way of open market operations.

FORECASTS

* Baseline GDP growth forecast for 2012/13 cut to 6.5% from 7.3%.

* Baseline wholesale price index inflation projection for March 2013 raised to 7%, from 6.5%.