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Home > Key Highlights - Second Quarter Review of RBI Monetary Policy 2010-11
Key Highlights - Second Quarter Review of RBI Monetary Policy 2010-11
Key Highlights - Second Quarter Review of RBI Monetary Policy 2010-11
  • Repo rate has been raised by 25 bps to 6.25% with immediate effect.
  • Reverse repo rate has been raised by 25 bps to 5.25% immediate effect.
  • The Bank Rate has been retained at 6.0%.
  • The cash reserve ratio (CRR) of scheduled banks has been retained at 6.0% of their net demand and time liabilities (NDTL).
  • The current data on indicators of economic performance remain consistent with the 8.5 per cent growth projected in the July 2010 Monetary Policy Statement.
  • Persistent high food prices even after a normal monsoon raise concerns about the structural nature of food inflation.
  • Money supply and non-food credit growth projection retained at 17 percent and 20.1 percent respectively.
  • The current account deficit, as percentage of GDP, could be expected to be higher in 2010-11 than 2.9 per cent recorded in 2009-10.
  • Volatility in industrial production data raises concerns about deceleration.
  • Hikes risk weight on residential home loans, increases provisioning for teaser rate loans.
  • Early results of corporate performance indicate sustained sales growth and improved profitability in second quarter of the current fiscal.
  • Rate hike expected to sustain anti-inflationary thrust of recent monetary actions and outcomes in the face of persistent inflation risks.
  • Banks will need to review investments in companies engaged in business other than financial services.
  • Draft guidelines for licensing of new banks to be out by the end of January 2011.
  • To act, if needed, to mitigate impact of lumpy forex flows.
  • Global economies' easy policy to encourage forex flows to emerging markets.
  • Extra liquidity from developed nations may flow to EMEs.
  • The Indian rupee has appreciated on the basis of 6-currency real effective exchange rate (REER) during the year so far, over and above the significant appreciation last year. The 36 currency REER remained largely stable.
  • Liquidity may ease on government spend in coming weeks.
  • RBI to act to mitigate changes in liquidity conditions.
  • RBI says inflationary expectations remain at elevated level.
  • RBI keeps Mar-end inflation projection unchanged from July review.
  • Retains Mar-end inflation estimate 6% under old series.
  • Under new WPI series, RBI's Mar-end inflation estimate 5.5%.
  • The foreign exchange reserves stood at US$ 295.4 billion as on October 22, 2010.
  • RBI indicated that the economy remains on a strong growth trajectory and its policy stance has addressed possible disruptions and provided a strong basis for continuing sustainable growth.
 
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