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RBI: Annual Policy Review
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MUMBAI - Following are the highlights of Reserve Bank of India's third-quarter review of Annual Policy
Statement for 2009-10 (Apr-Mar):
MEASURES
- CRR hiked by 75bps to 5.75% in two stages
- Reverse Repo, Repo Rate kept unchanged
- CRR hike of 75bps to impound 360 bln rupee from banks
- First stage of CRR hike to be 50bps effective Feb 13
- Second stage of CRR hike to be 25bps effective Feb 27
- FY10 GDP forecast raised to 7.5% vs 6% earlier
- FY10 inflation projection raised to 8.5% vs 6.5% earlier
STANCE
- Explicit change in stance to "managing the recovery"
- Focus on managing recovery vs managing crisis earlier
- Reverse Repo, Repo Rate kept unchanged
- Recovery justifies reversal of expansionary stance
- Current policy tools not at levels for fast recovering econ
- Necessary to carry forward process of exit further
- Inflation pressures stemming from supply side
- Recovery ups risk of wider inflationary pressures
- Supply side inflation could get generalised
- In FY11, many sectors could see rise in product prices
- High input cost, wages may transmit to product price FY11
- Must remember that recovery is yet to fully take hold
- Strong anti-inflation moves may undermine recovery
- Anti-inflation move can deter private investment, spending
- Stance aimed at anchoring inflation expectation
- Will tackle inflation through policy when warranted
- Active liquidity management to ensure credit needs met
- To ensure productive sectors credit needs met
- To maintain interest rates that support growth process
(Source: RBI)
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