MUMBAI, July 31: The Reserve Bank of India (RBI) today kept key rates unchanged for the second time since June but cut the Statutory Liquidity Ratio (SLR) by 1 per cent to 23 per cent from 24 per cent in a move to free up liquidity.
RBI retained its policy repo rate at 8 per cent and left the cash reserve ratio for banks unchanged at 4.75 per cent. CRR is the share of deposits banks must keep with the RBI.
Announcing the first quarter monetary policy, D Subbarao, RBI Governor said, in the current circumstances, lowering policy rates
will only aggravate inflationary impulses without necessarily stimulating growth.
Yesterday, in its Macroeconomic policy, RBI said its nearly three year-old battle with inflation is not yet over and a loose monetary policy is still far off. RBI said the near-term inflation trajectory still remains sticky on the back of weak monsoon, higher support price for farm crops and the falling rupee.
Headline inflation persisted above 7 per cent during the first quarter of the fiscal due to a rebound in food rates as well as high fuel prices, negating the deceleration in non- food manufactured products inflation or core inflation which fell below 5 per cent in June.
The softening impact of growth moderation on inflation was partly offset by structural rigidities in the supply of food as well as the exchange rate depreciation, it noted.
Noting that the benefits from the declining global commodity prices were partly offset by the falling rupee, RNI said ‘the near-term inflation trajectory could remain sticky and conditioned
by a number of risks that emanate from the unsatisfactory progress and distribution of the monsoons, higher MSPs announced for kharif crops and the impact of the exchange rate pass-through.’
(UNI)
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