Not increased CRR; liquidity withdrawal will be calibrated, measured: RBI Guv

The Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday said that the Monetary Policy Committee (MPC) have not increased the cash reserve ratio (CRR) in its third meeting, which was held from June 6 to 8.

Earlier, in its off-cycle meeting held from May 2 to 4, the MPC had hiked CRR (cash reserve ratio) by 50 basis points to 4.5 per cent from May 21. Under CRR, the commercial banks have to hold a certain minimum amount of deposit as reserves with the central bank. The percentage of cash required to be kept in reserves against the bank's total deposits is called the CRR.

Das, in his MPC press briefing today, also highlighted that the Indian economy continues to be resilient and is well placed to deal with challenges emanating from global issues.

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With inflation persistently hovering above the upper tolerance limit of 6 per cent, the RBI's six-member rate-setting panel voted unanimously to raise the lending rate of the repurchase (repo) rate by 50 basis points to 4.90 per cent, Das said.

He also added that the MPC doesn't want to take any abrupt, rough action that will be detrimental to inflation and markets.

Further, the Standing Deposit Facility rate and the Marginal Standing Facility Rate were accordingly adjusted higher by the same quantum to 4.65 per cent and 5.15 per cent, respectively.

The increase follows a 40 bps rise in early May at an unscheduled meeting that kicked off the central bank's tightening cycle.

To balance the inflation-growth dynamics, Das said RBI will remain focused on the withdrawal of accommodation as system liquidity continues to be high. Withdrawal of accommodation will be done in a way that growth will continue to get adequate support.

The Monetary Policy Committee (MPC) raised its inflation forecast for the current fiscal (April 2022 to March 2023) to 6.7 per cent from April prediction of 5.7 per cent but retained its economic growth projection at 7.2 per cent.

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