RBI keeps key rates unchanged

Mumbai, July 31 (ANI): The Reserve Bank of India (RBI) on Tuesday decided to keep all key rates unchanged in its first quarter review of monetary policy 2012-2013.

The Cash Reserve Ratio (CRR) has been kept unchanged at 4.75 per cent while the policy Repo Rate has been retained at eight per cent.

Consequently, the Reverse Repo Rate will remain unchanged at seven per cent, and the Marginal Standing Facility (MSF) rate and the Bank Rate remains at nine per cent.

The Statutory Liquidity Ratio (SLR) has been cut to 23 per cent from 24 per cent.

Announcing the policy stance, RBI Governor D Subbarao said that GDP growth forecast has been reduced to 6.5 per cent from 7.2 per cent as earlier projected. Inflation continues to be high and the inflation forecast has been raised to 7.3 per cent from 6.5 per cent as earlier projected.

He said the primary focus of RBI's monetary policy remains inflation management.

Subbarao said that while large global and emerging economies are slowing down and witnessing a fall in inflation, India is an outlier.

"India is an outlier. The economic growth is slowing but inflation is still high. Lowering rates will aggravate inflation and may not stimulate growth," he added. He assured markets that RBI would respond to any shocks swiftly.

The RBI has cut the growth forecast to 6.5 per cent for 2012-13 from 7.3 per cent earlier.

"Growth forecast was lowered due to deficient monsoon, weak industrial output and increased global risks," Subbarao said. (ANI)