home page




 

Newsletter

Daily Rates

Daily News

Book Store

Home

Conferences

Technology

Finance



  credit policy   overview | coop banks | basics | lending |adv banking | products | IT & banking  
                                                         
daily news | banking software| bank directory| internet banking| IT directory| banknet jobs


Second Quarter Review of Monetary Policy click here



Second Quarter Review of Monetary Policy 2010-11
-Announced on the 2nd November 2010



III. The Policy Stance

43. Since October 2009, the Reserve Bank has cumulatively raised the cash reserve ratio (CRR) by 100 basis points, and the repo and reverse repo rates under the LAF by 125 basis points and 175 basis points, respectively. The monetary policy response has been calibrated on the basis of India’s specific growth-inflation dynamics in the broader context of persistent global uncertainty.

44. Thus, our policy stance for 2010-11 for the remaining period has been conditioned by three major considerations:

45. First, the domestic economy is on a strong footing. The 8.8 per cent GDP growth for Q1 of 2010-11 suggests that the economy is steadily regaining the pre-crisis growth trajectory. Although uncertainty persists with regard to global recovery, India’s domestic growth drivers are robust which should help absorb to a large extent the negative impact of slowdown in global recovery.

46. Second, inflation remains high. Both demand side and supply side factors are at play. Inflationary expectations also remain at an elevated level. Given the spread and persistence of inflation, demand side inflationary pressures need to be contained and inflationary expectations anchored.

47. Third, even though a liquidity deficit is consistent with an anti-inflation stance, excessive deficiency can be disruptive both to financial markets and to credit growth in the banking system. To ensure that economic activity is not disrupted by liquidity constraints, the liquidity deficit needs to be contained within a reasonable limit.



48. Against the above stated backdrop, the stance of monetary policy is intended to :

Contain inflation and anchor inflationary expectations, while being prepared to respond to any further build-up of inflationary pressures.

Maintain an interest rate regime consistent with price, output and financial stability.

Actively manage liquidity to ensure that it remains broadly in balance, with neither a surplus diluting monetary transmission nor a deficit choking off fund flows.




Second Quarter Review of Monetary Policy 2010-11 ... click here

Highlights of 2nd Quarter Review of Monetary Policy 2010-2011... click here

RBI CREDIT AND MONETARY POLICIES (1999-2011)... click here













Advertise | Book Store | About us | Contact us | Terms of use | Disclaimer

© Banknet India | All rights reserved worldwide.
Best viewed with IE 4.00 & above at a screen resolution of 800 x 600 or higher