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11:14 PM
The Reserve Bank announces the following policy measures.
Rapo Rate- unchanged at 7.25 per cent.
Reverse Repo Rate-the reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands at 6.25 per cent
Marginal Standing Facility (MSF) Rate-he MSF rate remains unchanged at 300 basis points above the repo rate at 10.25 per cent.
Bank Rate-The Bank Rate stands at 10.25 per cent.
Cash Reserve Ratio(CRR)- CRR also unchanged at 4.0%.
Guidance:
The monetary policy stance over the last two years has predominantly been shaped by the growth-inflation dynamic even as external sector concerns have had a growing influence on policy calibration over the last one year. The current situation – moderating wholesale price inflation, prospects of softening of food inflation consequent on a robust monsoon and decelerating growth – would have provided a reasonable case for continuing on the easing stance. However, India is currently caught in a classic ‘impossible trinity’ trilemma whereby we are having to forfeit some monetary policy discretion to address external sector concerns. The recent liquidity tightening measures by the Reserve Bank are aimed at checking undue volatility in the foreign exchange market and will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling monetary policy to revert to supporting growth with continuing vigil on inflation. It should be emphasised that the time available now should be used with alacrity to institute structural measures to bring the CAD down to sustainable levels. The Reserve Bank stands ready to use all available instruments and measures at its command to respond proactively and swiftly to any adverse development.
Next Review of Monetary policy:
The next Mid-Quarter Review of Monetary Policy for 2013-14 is scheduled on Wednesday, September 18, 2013.
Rapo Rate- unchanged at 7.25 per cent.
Reverse Repo Rate-the reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands at 6.25 per cent
Marginal Standing Facility (MSF) Rate-he MSF rate remains unchanged at 300 basis points above the repo rate at 10.25 per cent.
Bank Rate-The Bank Rate stands at 10.25 per cent.
Cash Reserve Ratio(CRR)- CRR also unchanged at 4.0%.
Guidance:
The monetary policy stance over the last two years has predominantly been shaped by the growth-inflation dynamic even as external sector concerns have had a growing influence on policy calibration over the last one year. The current situation – moderating wholesale price inflation, prospects of softening of food inflation consequent on a robust monsoon and decelerating growth – would have provided a reasonable case for continuing on the easing stance. However, India is currently caught in a classic ‘impossible trinity’ trilemma whereby we are having to forfeit some monetary policy discretion to address external sector concerns. The recent liquidity tightening measures by the Reserve Bank are aimed at checking undue volatility in the foreign exchange market and will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling monetary policy to revert to supporting growth with continuing vigil on inflation. It should be emphasised that the time available now should be used with alacrity to institute structural measures to bring the CAD down to sustainable levels. The Reserve Bank stands ready to use all available instruments and measures at its command to respond proactively and swiftly to any adverse development.
Next Review of Monetary policy:
The next Mid-Quarter Review of Monetary Policy for 2013-14 is scheduled on Wednesday, September 18, 2013.
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