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Full Text of Third Quarter Review of Monetary Policy click here



Third Quarter Review of Monetary Policy 2009-2010
-29th January 2010



IV. Monetary Measures

37. On the basis of the current assessment and in line with the policy stance as outlined in Section III, the Reserve Bank announces the following policy measures:

Bank Rate

38. The Bank Rate has been retained at 6.0 per cent.

Repo Rate

39. The repo rate under the Liquidity Adjustment Facility (LAF) has been retained at 4.75 per cent.

Reverse Repo Rate

40. The reverse repo rate under the LAF has been retained at 3.25 per cent.

Cash Reserve Ratio

41. It has been decided to:

increase the cash reserve ratio (CRR) of scheduled banks by 75 basis points from 5.0 per cent to 5.75 per cent of their net demand and time liabilities (NDTL) in two stages; the first stage of increase of 50 basis points will be effective the fortnight beginning February 13, 2010, followed by the next stage of increase of 25 basis points effective the fortnight beginning February 27, 2010.

42. As a result of the increase in the CRR, about Rs. 36,000 crore of excess liquidity will be absorbed from the system.

43. The Reserve Bank will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted.



Expected Outcomes

44. The expected outcomes of the actions are:

(i) Reduction in excess liquidity will help anchor inflationary expectations.

(ii) The recovery process will be supported without compromising price stability.

(iii) The calibrated exit will align policy instruments with the current and evolving state of the economy.

Monetary Policy 2010-11

45. The Monetary Policy for 2010-11 will be announced on April 20, 2010.

Third Quarter Review of Monetary Policy 2009-2010... click here

Highlights of 3rd Quarter Review of Monetary Policy 2009-2010... click here

RBI CREDIT AND MONETARY POLICIES (1999-2010)... click here












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