Highlights of First Quarter Review of Annual Policy 2006-2007
Reverse Repo Rate increased to 6.0 per cent and Repo Rate to 7.0 per cent.
Bank Rate and Cash Reserve Ratio kept unchanged.
GDP growth projection for 2006-07 retained at 7.5-8.0 per cent.
Containing inflation within 5.0-5.5 per cent for 2006-07 warrants appropriate priority in policy responses.
Money supply, deposit and credit growth above the indicative projections, warranting caution.
Appropriate liquidity to be maintained to meet legitimate credit requirements, consistent with price and financial stability.
Barring the emergence of any adverse and unexpected developments in various sectors of the economy and keeping in view the current assessment of the economy including the outlook for inflation, the overall stance of monetary policy in the period ahead will be:
To ensure a monetary and interest rate environment that enables continuation of the growth momentum while emphasising price stability with a view to anchoring inflation expectations.
To reinforce the focus on credit quality and financial market conditions to support export and investment demand in the economy for maintaining macroeconomic and, in particular, financial stability.
To consider measures as appropriate to the evolving global and domestic circumstances impinging on inflation expectations and the growth momentum.