M A I N   N E W S

RBI keeps rates unchanged
Tribune News Service

Mumbai, January 29
Disregarding the clamour by industry to reduce interest rates, Reserve Bank of India Governor Y.V. Reddy chose to leave rates unchanged in the credit policy review unveiled today. With an eye on containing inflation, Reddy chose to leave the Cash Reserve Ratio (CRR) unchanged at 7.5 per cent while the repo rate, the rate at which the RBI borrows from the banks, too, has been left unchanged at 7.75 per cent. The bank rate and the reverse repo rates also remain the same.

Reddy also stated that the RBI also retained the flexibility to conduct overnight or longer-term repo, including the right to accept or reject tenders under the Liquidity Adjustment Facility (LAF), wholly or partially.

Announcing the policy, Reddy said the policy of the apex bank would be to contain inflation at around 5 per cent during the rest of the financial year. Hinting that the government's policy would be to reduce the amount of cash swirling around the economy, Reddy said “liquidity management would assume priority in the conduct of monetary policy through appropriate and timely action.”

Dr Reddy said the aim of the RBI was to reinforce the emphasis on price stability and well-anchored inflation expectations while ensuring a monetary and interest rate environment conducive to continuation of the growth momentum and orderly conditions in financial markets.

The apex bank aimed to emphasise credit quality as well as credit delivery, in particular, for employment-intensive sectors, while pursuing financial inclusion. The RBI would also monitor the evolving heightened global uncertainties and domestic situation impinging on inflation expectations, financial stability and growth momentum in order to respond swiftly with both conventional and unconventional measures, as appropriate.



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