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RBI CREDIT AND MONETARY POLICIES (1999-2010) click here
RBI announces Monetary Policy and Liquidity Management Measures- Hikes repo & reverse repo rates by 25 basis points
July 02, 2010:
Timing of the Action
This mid-cycle policy action has been warranted by the evolving macroeconomic situation. Even as data for real GDP growth and WPI inflation became available by mid-June 2010, it was considered inadvisable to raise the policy rates as the financial system was dealing with liquidity pressures triggered by sudden build-up in government cash balances occasioned by the larger than anticipated level of 3G spectrum and broadband wireless access auction realisations. Through the month of June, liquidity under LAF operations remained in deficit mode. Consequently, the call rate moved up significantly, resulting in an effective tightening at the short end of the yield curve. The liquidity situation has since begun to ease.
Expected Outcomes
The above monetary measures should contain inflation and anchor inflationary expectations going forward, while not hurting the recovery process. Easing liquidity and raising rates at the same time may seem apparently inconsistent. It should be noted in this context that the liquidity easing measures have become necessary to manage what is essentially a temporary and unanticipated development. In no way should they be viewed as inconsistent with the monetary policy stance of calibrated exit, which remains focussed on containing inflation and anchoring inflationary expectations without hurting growth.
The Reserve Bank will continue to monitor the macroeconomic conditions, particularly the price situation, and take further action as warranted.
RBI rate hike on 2nd July 2010....Read here
....Click Here For the Annual Policy Statement for the Year 2010-11
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