RBI reduced repo rate by 25 bps, CRR unchanged at 4%

RBI reduced repo (interest) rates (rates at which it lends money to banks) by 25 basis points from 7.5 per cent to 7.25 per cent.

The Reserve Bank of India on Friday in its credit policy review cut short-term lending rate (repo rate) by 25 basis points. The central bank has, however, left the cash reserve ratio (CRR) unchanged.

Saying that the monetary policy action for undermined by supply constraints, RBI Governor D Subbarao said the growth-inflation dynamics leave little room for further easing.

KEY HIGHLIGHTS:

>> Repo rate cut 25 basis points to 7.25 per cent.
>> Cash reserve ratio left unchanged at 4 per cent.
>> FY14 GDP growth projected at 5.7 per cent: RBI
>> WPI inflation for the fiscal FY14 expected to be around 5.5 per cent: RBI
>> Biggest risk to economy stems from Current Account Deficit (CAD): RBI
>> Likelihood of capital flight due to growth concerns in advanced economies: RBI
>> Deficits remain high despite recent government actions: RBI
>> RBI proposes doubling of priority sector lending limits to MSMEs to Rs 5 crore.
>> Can’t afford to lower guard against inflation, says the central bank
>> Modest improvement seen in growth in FY14: RBI
>> Growth in services and exports to remain sluggish: RBI
>> Food inflation to add further pressure to inflation management: RBI
>> Aim to reach 5.5 per cent inflation by March 2014: RBI
>> Growth-inflation dynamics leave little room for further easing: RBI
>> Investigations into Cobrapost’s sting operation calls for a better regulatory compliance by banks: RBI
>> Banks are not carrying out customer due diligence while marketing and distributing third-party products: RBI

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