Friday, December 16, 2011

RBI keeps all rates unchanged in December policy review

The RBI kept repo rate, at which it lends to banks, constant at 8.5%, reverse repo rate at 7.5. Cash reserve ratio (CRR) which is the amount of cash the banks have to maintain with the Reserve Bank of India as a percentage of their net demand and time liabilities (NDTL) has been maintained at 6%.

Guidance is now biased towards growth if inflation continues on its projected downward trajectory; this indicates that if inflation threats are not further heightened, the RBI may start reversing its rate cycle after 13 consecutive increases in the policy rates, which have risen by 375 basis points since March 2010.

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