First Quarter Review of Annual Monetary Policy for 2008-09
III. Monetary Measures
(a) Bank Rate
103. The Bank Rate has been kept unchanged at 6.0 per cent.
(b) Repo Rate/Reverse Repo Rate
104. It is considered desirable to keep the reverse repo rate under the LAF unchanged at 6.0 per cent.
105. In view of the current macroeconomic and overall monetary conditions, it has been decided to increase the fixed repo rate under the LAF by 50 basis points from 8.5 per cent to 9.0 per cent with immediate effect.
106. The Reserve Bank has the flexibility to conduct repo/reverse repo auctions at a fixed rate or at variable rates as circumstances warrant.
107. The Reserve Bank retains the option to conduct overnight or longer term repo/reverse repo under the LAF depending on market conditions and other relevant factors. The Reserve Bank will continue to use this flexibility including the right to accept or reject tender(s) under the LAF, wholly or partially, if deemed fit, so as to make efficient use of the LAF in daily liquidity management.
(c) Cash Reserve Ratio
108. The cash reserve ratio (CRR) of scheduled banks is currently at 8.75 per cent. On a review of the current liquidity situation, it is considered desirable to increase the CRR by 25 basis points to 9.0 per cent with effect from the fortnight beginning August 30, 2008.
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