Mumbai, Nov 2 (IANS) Following are the highlights of the second quarter review of the monetary policy conducted by the Reserve Bank of India (RBI) Tuesday, which focuses on reining in inflationary expectations in the economy.
– Repurchase rate or short-term lending rate hiked by 25 basis points to 6.25 percent
– Reverse repurchase or short-term borrowing rate raised by 25 basis points to 5.25 percent
– Policy rates such as cash reserve ratio and statutory liquidity ratio unchanged
– Growth forecast for this fiscal retained at 8.5 percent
– Hike in rates is moderate, will not disrupt growth
– Current rate of inflation is still well above the comfort zone of the Reserve Bank, want to contain annual inflation in the region of 4-4.5 percent
– Persistent high food prices even after a normal monsoon raise concerns about the structural nature of food inflation
– Money supply and non-food credit growth projection retained at 17 percent and 20.1 percent respectively
– Volatility in industrial production data raises concerns about deceleration
– Hikes risk weight on residential home loans, increases provisioning for teaser rate loans
– Early results of corporate performance indicate sustained sales growth and improved profitability in second quarter of the current fiscal
– Rate hike expected to sustain anti-inflationary thrust of recent monetary actions and outcomes in the face of persistent inflation risks
– Banks will need to review investments in companies engaged in business other than financial services
– Draft guidelines for licensing of new banks to be out by the end of January 2011
– Next mid-quarter review of monetary policy on Dec 16
– Third quarter review of monetary policy is scheduled on Jan 25
