Quick Note – 13:43 Hrs

As you may be aware, RBI has announced a few policy changes as part of its quarterly policy review today. Given below are the key points :-

  • Policy was along expected lines and reflects the gradual exit from the easy monetary policy stance  
  • Leaves repo and reverse repo unchanged
  • Hikes Cash Reserve Ratio (CRR) by 75 bps to 5.75% – to be implemented in two phases
  • GDP growth estimates increased to 7.5% from 6% – despite assuming very low growth in farm production
  • Revises inflation estimate upwards to 8.5% at end of March 2010 from 6.5% projected earlier – expects economic growth to add to supply side constraints
  • Cuts non-food credit growth target to 16% from 18% – due to easy availability of funds from non-banking and external sources
  • Overall policy stance is to manage inflation expectations, ensure adequate liquidity and manage interest rates to support growth & ensure price/financial stability.

Source: Franklin Templeton

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