RBIs Mid Quarter Review of Monetary Policy

[ Date : 2011 Dec 16 ] The Reserve Bank of India has announced its Mid Quarter Monetary Policy Review December 2011. Considering the current Macro Economic assessment the RBI has kept the Cash Reserve Ratio (CRR) unchanged at 6% and the policy Repo rate under the Liquidity Adjustment Facility (LAF) is also kept unchanged at 8.5%. The Industry was expecting a marginal cut in the CRR to induce liquidity in the system to promote investments. The move is on expected lines. Consequently, the reverse Repo rate under the LAF will remain unchanged at 7.5% and the Marginal Standing Facility (MSF) rate at 9.5%. The RBIs guidance that monetary policy actions from now on will respond to the slow down in growth is reassuring. The Government should take new policy actions to revive slowing growth and control inflation as fiscal and monetary options are limited. Our Chamber welcomes and appreciates the RBI in keeping all the key rates unchanged till a more clear picture on inflation and inflationary expectations are visible. We hope as stated in the Policy, the RBI will make an assessment of its growth and inflation projections for 2011-2012 in the 3rd quarter review. However, the global economic situation continues to be fragile with no credible solution as yet to the immediate euro area sovereign debt problem. - M. Krishnan, President