India's central bank said on Tuesday it was raising its cash reserve ratio (CRR) by 25 basis points to 8.25 per cent with effect from May 24 to control inflation-stoking cash in the system but kept all other official rates unchanged.
It forecast economic growth of 8.0 to 8.5 per cent in the fiscal year that began this month, after an estimated 8.7 per cent in 2007/08, and aimed for inflation of 'around 5.5 per cent' this fiscal year but with the goal of lowering it close to 5.0 per cent as soon as possible.
The Reserve Bank of India (RBI) said managing liquidity would continue to receive priority in its policy objectives but warned it would act swiftly to curb any signs of 'adverse developments' in inflation expectations.
The unexpected increase in the CRR , the amount of funds banks have to keep on deposit with the central bank, follows a surprise two-stage rise earlier in April to 8.0 per cent. The second stage of that increase has still to take effect on May 10.
The RBI kept its key lending rate steady at 7.75 per cent and left the reverse repo rate, the rate at which it absorbs excess cash from banks, unchanged at 6.0 per cent.
The bank rate, which is used to price medium-term and long-term loans, remained at 6.0 per cent.
The decision comes as annual inflation holds above 7 per cent, its highest in more than three years, due in part to rises in international food, oil and metal prices.
A slim majority of economists polled by Reuters last week had predicted no change in rates, including the CRR, but a substantial minority had expected one or more of the key interest rates to rise.
It forecast economic growth of 8.0 to 8.5 per cent in the fiscal year that began this month, after an estimated 8.7 per cent in 2007/08, and aimed for inflation of 'around 5.5 per cent' this fiscal year but with the goal of lowering it close to 5.0 per cent as soon as possible.
The Reserve Bank of India (RBI) said managing liquidity would continue to receive priority in its policy objectives but warned it would act swiftly to curb any signs of 'adverse developments' in inflation expectations.
The unexpected increase in the CRR , the amount of funds banks have to keep on deposit with the central bank, follows a surprise two-stage rise earlier in April to 8.0 per cent. The second stage of that increase has still to take effect on May 10.
The RBI kept its key lending rate steady at 7.75 per cent and left the reverse repo rate, the rate at which it absorbs excess cash from banks, unchanged at 6.0 per cent.
The bank rate, which is used to price medium-term and long-term loans, remained at 6.0 per cent.
The decision comes as annual inflation holds above 7 per cent, its highest in more than three years, due in part to rises in international food, oil and metal prices.
A slim majority of economists polled by Reuters last week had predicted no change in rates, including the CRR, but a substantial minority had expected one or more of the key interest rates to rise.
Posts
No comments:
Post a Comment