Highlights of Indian central bank's monetary policy update
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Following are the highlights of monetary policy update conducted by Reserve Bank of India (RBI) Governor D. Subbarao that saw key rates hiked by a steep 50 basis points on Tuesday:
* Repurchase rate, or short-term lending rate, hiked to 8 per cent from 7.5 per cent
* Reverse repurchase rate, or short-term borrowing rate, hiked to 7 per cent from 6.5 per cent.
* Cash reserve ratio retained at 6 per cent
* Statutory liquidity ration retained at 24 per cent
* Bank rate untouched at 6 per cent
* Inflation expected to remain elevated for few more months
* Moderation in inflation seen toward latter part of year
* Projection on annual inflation for year-end at 7 per cent, against 9.4 per cent now
* Projection on growth left unchanged at 8 per cent for current fiscal
* Intention to maintain interest rate environment that moderates inflation
* Policy also tuned to manage risk of falling growth
* Measures to manage liquidity without undue stress on financial system
* Outlook for global crude oil prices uncertain in the near future
* High global commodity prices may also exert pressure on domestic inflation
* High global crude prices, domestic fuel subsidies will impact inflation
* This year's monsoon may impact yields of grains, pulses, oilseeds and cotton
* Inadequate supplies may keep prices of eggs, meat, fish, milk and pulses high
* Government's fiscal deficit target of 4.6 per cent now a major challenge
* Real estate markets have remained firm
* Next mid-quarter review of monetary policy September 16
* Second quarter review of monetary policy October 25
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