RBI Policy

India Infoline Ltd.

"In the 1QFY10 monetary policy review, RBI has kept the key policy rates (Repo rate at 4.75%, reverse repo rate at 3.25% and bank rate at 6%) & reserve requirement (CRR at 5%) unchanged. This was broadly in line with expectations as there is ample liquidity in the system and during FY10 RBI has been absorbing over Rs1,20,000 crore on average daily basis under the LAF window. RBI has placed the GDP growth projections for FY10 at 6% with an upward bias. It has also revised the growth projection for Money supply (M3) from 17% to 18% and deposit growth of commercial banks to 19%. RBI has said that the negative WPI inflation may not persist beyond a few months as it is due to the statistical base effect and is transitory in nature. For the full year FY10 RBI has revised the inflation projection to 5% from 4% on account of expectations of higher food inflation and commodity price rise. RBI has said that it would continue to ensure price stability and anchor inflation expectations. The conduct of monetary policy shall continue to condition and contain perception of inflation in the range of 4.0-4.5%."

(The RBI policy is in line the expectations of MarketFastFood (MFF) as mentioned in Quick Note yesterday)

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