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RBI leaves key rates unchanged

October 24, 2008

After infusing Rs 1,85,000 crore (Rs 1850 billion) liquidity into the banking system this month, RBI today surprised the market by keeping its key rates unchanged in the mid-term review of annual monetary policy, which lowered economic growth projections to 7.5-8 per cent for 2008-09.

With the global commodity and oil prices cooling, the central bank kept the inflation projection unchanged at 7 per cent by end-March but emphasised that inflation continued to be a matter of concern requiring constant "vigil."

Outlining the monetary measures, the policy said the benchmark bank rate has been kept unchanged at 6 per cent, repo rate at 8 per cent, reverse repo at 6 per cent and CRR at 6.5 per cent.

On October 11, the apex bank cut CRR, the percentage of amount banks are required to park with the central bank, by 2.5 per cent -- from 9 per cent to 6.5 per cent -- to inject Rs 100,000 crore (Rs 1,000 billion) liquidity into the system.

It reduced repo rate, the rate at which RBI lends short-term funds to banks, by one per cent to 8 per cent on October 20.

Text: PTI

Highlights.. .

Image: Governor of the Reserve Bank of India Duvvuri Subbarao. | Nicholas Kamm/AFP/Getty Images

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