RBI policy review: D Subbarao leaves CRR, repo rate unchanged
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Subbarao holds back on CRR, repo rate cut

The repo rate, last reduced in April by 50 basis points, stays unchanged at 8 per cent. The cash reserve ratio stands at 4.25 per cent.

  • Mumbai,  December 18, 2012  
  • |  
  • UPDATED   13:04 IST

The Reserve Bank of India on Tuesday went against the market sentiment, ignoring calls of a interest rate cut from the industry and experts alike in its mid-quarter monetary policy review.

Buoyed by a fall in inflation figures in November, bankers and industry leaders alike had been demanding a cut in interest rate to prop up growth and investment.

The central bank left the repo rate and cash reserve ratio (CRR) unchanged on Tuesday.

The repo rate is the rate at which it lends money to commercial banks. It was last reduced in April, by 50 basis points, to 8 per cent. CRR is the portion of deposits banks have to mandatorily park with RBI. It stands at 4.25 per cent now.

Inflation declined to 10-month low of 7.24 per cent in November from 7.45 per cent in the previous month.

The 30-share BSE Sensex traded flat soon after news of no rate cut from the RBI filtered in. The index was at 11.34 trading 0.34 points in red at 19,244.04.

Highlights from RBI's policy review:

 

  1. RBI keeps interest rate and cash reserve ratio (CRR) unchanged
  2. The biggest risk to growth stems from politico-economic considerations: RBI
  3. With inflation easing, the monetary policy will focus on removing threats to growth: RBI
  4. Inflationary pressure moderating but high food and commodity prices continue to remain a risk: RBI
  5. RBI says it is closely monitoring the evolving growth-inflation dynamics.
  6. RBI to update formal assessment of its growth and inflation projections for 2012-13 in January.
  7. With inflation pressures ebbing, monetary policy has to shift focus and respond to threats to growth from now on, says RBI.

More details awaited