RBI leaves key rates unchanged; focus still on price stability
28 Jul 2009
The Reserve Bank of India has kept all key interest rates, including the Bank Rate as well as the repo and reverse repo rates unchanged. RBI also kept the cash reserve ratio for banks unchanged, signalling that its policy stance still remains focused on money management.
RBI kept the Bank Rate at 6.0 per cent and the cash reserve ratio for banks at 5.0 per cent of net demand and time liabilities (NDTL). The repo rate and the reverse rate under the Liquidity Adjustment Facility (LAF) also remain unchanged at 4.75 per cent and 3.25 per cent, respectively.
RBI, however, said it would have the flexibility to conduct repo/reverse repo auctions at a fixed rate or at variable rates as circumstances warrant.
"The Reserve Bank will continue to use this flexibly, including the right to accept or reject tender(s) under the LAF, wholly or partially, so as to make efficient use of the LAF in daily liquidity management," RBI said in a release.
RBI said the stance of monetary policy for the remaining period of 2009-10 would be to manage liquidity actively so that the credit demand of the government is met while ensuring the flow of credit to the private sector at viable rates.
The central bank said it would keep a vigil on the trends and signals of inflation, and remain prepared to respond quickly and effectively through policy adjustments.
