RBI released the First Quarter Review of Monetary Policy for 2013-14 on 30 July 2013. The highlights are as following:
• The repo rate was kept unchanged at 7.25 percent.
• Reverse repo remains at 6.25 percent.
• Cash reserve ratio unchanged at 4.00 percent
• Keeps Marginal Standing Facility rate at 10.25 percent.
• Bank rate stands at 10.25 percent.
Considerations behind the Policy Move
• The policy stance in this review was informed by two considerations.
• First, the need for continuous vigil and preparedness to pro-actively respond to risks to the economy from external developments, especially those stemming from global financial markets.
• Second, managing the trade-off posed by increased downside risks to growth and continuing risks to inflation and inflation expectations.
Monetary Policy Stance
Accordingly, the four broad contours of RBI’s monetary policy stance are as following:
• First, to address the risks to macroeconomic stability from external shocks;
• Second, to continue to address the heightened risks to growth;
• Third, to guard against re-emergence of inflation pressures; and
• Fourth, to manage liquidity conditions to ensure adequate credit flow to the productive sectors of the economy.
RBI Cut GDP growth forecast for 2013-14 to 5.5 percent from 5.7 percent earlier.
When: 30 July 2013.