Full Text - RBI's Third Quarter Review of Monetary Policy Statement 2012-13
IV. Monetary Measures
36. On the basis of current assessment and in line with the policy stance outlined in Section III, the Reserve Bank announces the following policy measures:
37. It has been decided to:
reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8.0 per cent to 7.75 per cent with immediate effect.
Reverse Repo Rate
38. The reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands adjusted to 6.75 per cent with immediate effect.
Marginal Standing Facility (MSF) Rate
39. The Marginal Standing Facility (MSF) rate, determined with a spread of 100 basis points above the repo rate, stands adjusted to 8.75 per cent with immediate effect.
40. The Bank Rate stands adjusted to 8.75 per cent with immediate effect.
Cash Reserve Ratio
41. It has been decided to:
reduce the cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.25 per cent to 4.0 per cent of their net demand and time liabilities (NDTL) effective the fortnight beginning February 9, 2013.
42. As a result of this reduction in the CRR, around Rs180 billion of primary liquidity will be injected into the banking system.
43. With headline inflation likely to have peaked and non-food manufactured products inflation declining steadily over the last few months, there is an increasing likelihood of inflation remaining range-bound around current levels going into 2013-14. This provides space, albeit limited, for monetary policy to give greater emphasis to growth risks. The above policy guidance will, however, be conditioned by the evolving growth-inflation dynamic and the management of risks from twin deficits.
44. The policy actions and the guidance in this Statement given are expected to:
i) support growth by encouraging investment;
ii) continue to anchor medium-term inflation expectations on the basis of a credible commitment to low and stable inflation; and
iii) improve liquidity conditions to support credit flow.
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