The Reserve Bank of India on Tuesday hiked short-term lending and borrowing rates and the portion of money banks deposit with it by 25 basis points each.
The apex bank hiked its repo, reverse repo (overnight lending and borrowing rates) to 5.25 per cent and 3.75 per cent, respectively, while the cash reserve ratio, or the portion of deposits banks park with RBI, to 6 per cent in line with analysts' expectations.
Following are the highlights of the RBI's Monetary Policy for 2010-11.
- Cash reserve ratio raised by 25 basis points to 6%
- Repo rate raised by 25 basis points to 5.25%
- Reverse repo rate hiked by 25 basis points to 3.75%
- CRR hike to come into effect from April 24
- CRR hike to suck out Rs 12,500-crore liquidity
- Bank rate retained at 6%
- Economic growth projection seen at 8% for 2010-11
- FY'10 GDP growth seen at 7.2-7.5%
- Inflation pegged at 5.5% for 2010-11
- Quarterly policy review on July 27, 2010
- RBI targets inflation at 3 pc in medium term
- RBI to closely monitor price situation
- Demand side pressures building up in economy
- Lower policy rates can impair inflationary expectations
- Policy to be aligned with evolving state of economy
- RBI proposes to introduce some Interest Rate futures
- To prepare discussion paper on foreign banks by September.
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