The 6th bimonthly monetary policy has been disclosed by RBI. After keeping ket policy rates unchanged last time reserve bank of india has decided to reduce the rates. Repo rate was cut by 25 basis points whereas the cash reserve ratio was kept unchanged. Dr. Rajan expected crude oil price to remain low over the year. Also inflation was moderated due to weak demand drive. Households’ inflation (both long term and near term) have come down to single digits for the first time since 2009. Inflation has fallen below the targeted level of 8% by 2015. If the trend continues inflation is likely to come below 6%.
Policy Rates in 6th Bimonthly monetary policy review
Repo rate – 7.75%
Reduced by 25 basis points under liquidity adjustment facility.
Reverse repo rate – Kept unchanged at 6.75%
SLR (Statutory liquidity ratio) – Unchanged at 22%
Bank rate – Was fixed at 8.75%
under liquidity adjustment facility.
Marginal standing facility (MSF) – 8.75%
Cash reserve ratio (CRR) – Unchanged at 4% of Net Demand and Time Liability (NDTL)
Repo rate – The rate at which RBI lends to commercial banks incase of shortage of funds.
Reverse repo rate – The rate at which RBI borrows money from commercial banks.