Highlights
•
Bank Rate kept unchanged.
•
Reverse Repo Rate under LAF kept unchanged.
•
Repo Rate increased by 50 basis points from 8.5 per cent to
9.00 per cent.
• Cash Reserve Ratio to be increased
by 25 basis points to 9.0 per cent with effect from the fortnight
beginning August 30, 2008.
• GDP growth projection for
2008-09 revised from the range of 8.0-8.5 per cent to around
8.0 per cent, barring domestic or external shocks.
• While the policy actions would
aim to bring down the current intolerable level of inflation
to a tolerable level of below 5.0 per cent as soon as possible
and around 3.0 per cent over the medium-term, at this juncture
a realistic policy endeavour would be to bring down inflation
from the current level of about 11.0-12.0 per cent to a level
close to 7.0 per cent by March 31, 2009.
• While there are early signs
of some moderation in money supply and deposit growth, they
continue to expand above the indicative projections warranting
continuous vigilance and appropriate and timely policy responses.
• In view of the evolving environment of heightened uncertainty
in global markets and the dangers of potential spillovers to
domestic markets, liquidity management will continue to receive
priority in the hierarchy of policy objectives over the period
ahead.
• Barring the emergence of any adverse and unexpected
developments in various sectors of the economy, assuming that
capital flows are effectively managed, and keeping in view the
current assessment of the economy including the outlook for
growth and inflation, the overall stance of monetary policy
in 2008-09 will broadly continue to be:
• To ensure a monetary and interest rate environment that
accords high priority to price stability, well-anchored inflation
expectations and orderly conditions in financial markets while
being conducive to continuation of the growth momentum.
• To respond swiftly on a continuing
basis to the evolving constellation of adverse international
developments and to the domestic situation impinging on inflation
expectations, financial stability and growth momentum, with
both conventional and unconventional measures, as appropriate.
• To emphasize credit quality
as well as credit delivery, in particular, for employment-intensive
sectors, while pursuing financial inclusion.
(Source: RBI website)
