RBI policy review: No change in repo rate, CRR- Business News
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RBI policy review: Highlights

The Reserve Bank of India (RBI) on Monday left key rates unchanged after reviewing its monetary policy. The move is likely to disappoint the industry which was banking on RBI cutting rates to boost growth.

  • Mumbai,  June 18, 2012  
  • |  
  • UPDATED   12:58 IST

The Reserve Bank of India (RBI) on Monday left key rates unchanged after reviewing its monetary policy. The move is likely to disappoint the industry which was banking on RBI cutting rates to boost growth.

In no relief to loan buyers, the central bank has kept repo rate unchanged at 8 per cent, which automatically keeps the reverse repo rate at 7 per cent. Cash Reserve Ratio (CRR) - the portion of deposits that banks are required to keep with the central bank - has also been left unchanged at 4.75 per cent.

Following the shocking GDP numbers, which showed that economic expansion had hit a nine-year low at 6.5 per cent in FY12, there had been incessant calls from the government as well as economists to give growth concerns a priority, rather than the inflation.

So far this year RBI Governor D Subbarao had reduced CRR by a hefty 125 bps and the repo rate by a more than expected 50 bps as the core inflation began to ease and growth began to dodder.

This was a radical departure from his 20-month rate-hike cycle beginning March 2010 wherein he had ratcheted up lending rates by a whopping 350 bps.

Highlights from the review:

  • Inflationary pressure still high: RBI
  • Future action will depend upon external factors, domestic developments and inflationary risks: RBI
  • Retail inflation moves up marginally to 10.36 per cent in May, from 10.26 per cent in April.