Highlights of Reserve Bank of India (RBI)’s mid-quarter monetary policy review.
In his Maiden policy announcement, the newly appointed Reserve Bank of India (RBI) Governor Raghuram Rajan hikes interest rate which caught the corporate sector by surprise and spooked the stock market. In fact, the hike in the repo rate eclipsed the equally significant cut in Marginal Standing Facility (MSF) rate.
Key short-term lending rate (repo rate) hiked by 0.25 per cent to 7.5 per cent.
Borrowing rate for banks reduced under marginal standing facility by 0.75 per cent to 9.5 per cent.
Minimum daily liquidity maintenance of CRR eased to 95 per cent from 99 per cent.
Cash reserve ratio (CRR) maintained at 4 per cent.
WPI inflation will be higher than that projected for rest of the year.
Economic growth trailing below potential.
Pace of infrastructure project completion subdued, new projects’ starts remain muted.
Next monetary policy review on October 29.